Pan Shiyi's golden cicada hulls,
Billions of taxes are annihilated!
In business, we don't evaluate entrepreneurs' personal choice
Pan Shiyi's golden cicada hulls,
Billions of taxes are annihilated!
In business, we don't evaluate entrepreneurs' personal choices and market judgments. From the commercial point of view only, Pan Shiyi and Zhang Xin can be regarded as the most successful couple.
As one of the six gentlemen of Vantone, Pan Shiyi is a successful real estate businessman, while his wife Zhang Xin is a financial person, studying in Britain and working in an investment bank on Wall Street. The mode of husband-wife cooperation between them is really a perfect match, with Pan Shiyi standing at the front desk and Zhang Xin operating the architecture at the back.
Judging from the commercial structure (control and tax saving), SOHO China under the control of Pan Shiyi and Zhang Xin is undoubtedly successful. If the $4 billion (worth RMB 28 billion) equity transfer is successfully delivered, the couple probably won't have to pay billions of RMB in taxes.
So, how did they do it? Next, we analyze the influence of cross-border offshore company structure, trust structure and tax burden from three aspects:
First, the road to listing in Hong Kong and the structure of offshore companies
After getting married on 1994, Pan Shiyi and Zhang Xin outlined the business matters together and established a company called Beijing Hongshi Industrial Co., Ltd., which is the predecessor of SOHO (China) Co., Ltd. listed in Hong Kong.
In 2002, SOHO China Limited was established in Cayman Islands. This is an entity listed in Hong Kong in 2007. It has two shareholders, namely Boyce Limited and Capevale Limited, both of which are incorporated in the British Virgin Islands.
According to the arrangement of the listing structure designed at that time, several BVI companies will be designed for Pan and Zhang's real estate projects and their companies in the Mainland, and then these BVI companies will be loaded into SOHO China Co., Ltd. established in Cayman, thus completing the listing related matters.
In 2005, Pan Shiyi changed all shareholders of Boyce Limited and Capevale Limited to Zhang Xin, and Pan Shiyi withdrew. After the free transfer of equity, Pan Shiyi has no legal equity in SOHO China Co., Ltd..
At this point, Pan Shiyi basically transferred all his real estate business rights in China to overseas, and finally completed the listing in Hong Kong.
In 2007, SOHO China Co., Ltd. officially launched its initial public offering in Hong Kong, and SOHO (China) became a more familiar name for mainlanders.
Second, the trust structure
In addition to the offshore companies mentioned above, there is also a company registered in Cayman, namely Capevale.
According to the 20 17 annual report, the shareholder structure of SOHO (China) is: Capevale(Cayman) incorporated in Cayman Islands, accounting for 63.9309% of the total shares; Boyce Limited and Capevale(BVI) account for 365,438+0.9654% of the total shares. Among them, Boyce Limited and Capevale(BVI) are wholly-owned subsidiaries of Capevale (Cayma).
It can be seen that Capevale (Cayman) is a very important company, which was established for the purpose of trust planning. On June 25th, 2005, 165438+ Zhang Xin granted all the shares of Capevale (Cayman) Company to a trust plan, which was irrevocable forever. Zhang Xin is the sole grantor, protector and sole beneficiary of this trust plan.
At this point, all the trust structures have been completed. After completing this operation, both Pan Shiyi and Zhang Xin no longer hold shares in SOHO China Co., Ltd., a listed company entity, but enjoy relevant rights and interests in the form of trust beneficiaries.
Third, the exit path and tax analysis
Previously, Pan Shiyi's company has been clearing its positions by selling assets. From the perspective of company law, the cash recovered from the sale of company assets will remain in the system of listed companies and will not be directly distributed to individuals.
If Blackstone successfully privatizes SOHO China this time, Pan Shiyi will cash out all the shares in one step and get real money. Below, we make a simple comparative analysis from the perspective of company law and tax planning:
Situation 1: domestic companies
If the SOHO China Company controlled by Pan Shiyi and his wife is a purely domestic company structure, individuals need to pay 20% income tax when transferring shares, which is equivalent to 28 billion RMB according to US$ 4 billion (exchange rate is 7). After deducting the necessary costs, the tax payment is estimated to be several billion.
Situation 2: Indirect transfer
If Pan Shiyi (a citizen of China) holds the equity of an offshore company and then controls a Hong Kong company or a mainland main company through the offshore company, then indirectly transferring the business of the mainland main company through the transfer of the equity of the offshore company will inevitably be taxed.
According to the relevant provisions of overseas "indirect transfer" transactions in the Announcement of State Taxation Administration of The People's Republic of China on Several Issues Concerning Indirect Transfer of Enterprise Income Tax by Non-resident Enterprises, if the property such as the equity of China resident enterprises is indirectly transferred to avoid the obligation of paying enterprise income tax, the China tax authorities will re-characterize the indirect transfer transaction and confirm it as a direct transfer of the equity of China resident enterprises.
Situation 3 (current reality): foreign capital+offshore company+trust
Pan Shiyi (Chinese mainland nationality) first transferred his equity to his wife Zhang Xin (Hong Kong nationality) for free, and then according to Article 13 of the Announcement on the Transfer of Equity issued by State Taxation Administration of The People's Republic of China, People's Republic of China (PRC), personal income tax may not be levied if the equity is transferred to the spouse who can provide legal and valid identification. At this point, the owner of the equity has become Zhang Xin from Hong Kong, which is the first step, tax-free transfer.
Then, Zhang Xin set up a trust plan with her equity in Cayman Company. At this point, Zhang Xin will no longer hold the equity, but enjoy the relevant rights and interests as the beneficiary of the trust. The Cayman Islands, where the above-mentioned trust structure is located, is also a famous tax depression. Personal income tax, corporate income tax and real estate tax, which are common in other countries, are not collected in the Cayman Islands.
If you have any questions about finance and taxation, please pay attention to Jiu Si Finance and Taxation, and talk with Sisi to answer questions.
* This article was edited by Jiu Si Finance and Taxation Sisi.