Withholding Tax Calculation Rules for Cross Border Capital Account Remittances

Arithmetic

Cross-border remittances originating from capital account transactions in Mainland China trigger enterprise income tax withholding under Article 3 and Article 19 of the PRC Enterprise Income Tax Law. Non-resident enterprises without an establishment inside China ~ or those whose onshore establishment has no actual connection to the realized gain ~ pay withholding tax at a statutory reduced rate of 10 percent on China-sourced gross capital income. The underlying mechanics depend on whether the transfer is an equity disposition, a dividend distribution, a capital reduction, or a liquidation payout.

Tax liabilities crystallize at settlement, and determining the exact remittable sum requires applying foreign exchange translation rules at specific regulatory dates set by the State Taxation Administration.

When cross-border equity transfers involve domestic Chinese entities, the taxable gain equals the total transaction consideration minus the original historical investment cost basis of the equity. Purchase agreements often stipulate net payment terms, shifting the economic burden of the Chinese tax liability onto the buyer or requiring a grossed-up remittance. In net settlement deals, grossing up the payable amount is necessary to establish the taxable gross consideration.

The baseline gross-up formula converts the agreed net consideration into the gross taxable base:

Gross Taxable Consideration Formula ~ Gross Consideration = Net Agreed Consideration / (1 – Withholding Tax Rate)

Applying the standard 10 percent statutory withholding tax rate to a net purchase price of USD 10,000,000 yields a gross taxable consideration of USD 11,111,111.11. The resulting withholding tax liability equals USD 1,111,111.11, leaving exactly USD 10,000,000 for offshore remittance. If the transfer carries a deductible historical cost basis of USD 4,000,000 previously injected into the registered capital of the Chinese enterprise, the gross gain calculation adjusts to reflect that capital core.

Gross Income Base and Deductible Cost Mechanics

The deductible original investment cost reflects the actual paid-in capital contributed by the non-resident investor or the purchase price paid in a prior equity acquisition. Historical paid-in capital verified through formal capital verification reports or bank payment slips serves as the baseline deductible amount. If a foreign investor acquires equity in multiple tranches over time, tax authorities require using either the weighted average cost method or specific tranche identification to compute the deductible basis during partial equity sales.

Non-deductible items include general advisory fees, legal expenses, offshore administrative overhead, and unverified financing costs linked to the acquisition.

Dividends paid out of an enterprise’s accumulated post-tax net profits carry no deductible cost basis offset; withholding tax applies directly to the gross dividend declared by the board of directors or shareholders. For instance, if a Chinese subsidiary declares a dividend of RMB 50,000,000 to its foreign parent, the 10 percent statutory withholding tax comes to RMB 5,000,000, leaving a net cross-border remittance of RMB 45,000,000. Foreign exchange conversion rules add operational friction whenever deal prices are set in foreign currency while tax assessments must be made in Renminbi.

Under Public Notice 2017 No. 37, non-resident capital gains converted at the prevailing People’s Bank of China exchange rate on the tax withholding date generate immediate tax liabilities regardless of offshore payment clearance.

Foreign currency conversions frequently introduce timing variances that alter final tax obligations. Under Public Notice 2017 No. 37, when equity transfer consideration is set in foreign currency, the withholding agent converts the taxable income into Renminbi using the People’s Bank of China central parity exchange rate published on the date the withholding obligation arises. That obligation arises on the payment date ~ meaning the date the payer actually remits payment or when consideration falls due, including non-monetary asset transfers or debt set-offs.

Foreign Currency Exchange Conversion Timing Rules

Where a buyer pays consideration in installments, each payment triggers its own proportional calculation of income, deductible cost basis, and withholding tax. The deductible cost basis spreads across installments according to the ratio of the current installment to total contract value. For example, if an offshore buyer agrees to pay USD 20,000,000 for equity with a historical cost basis of USD 8,000,000 across two equal installments of USD 10,000,000, each payment carries a deductible cost allocation of USD 4,000,000.

The taxable net gain per installment comes out to USD 6,000,000, producing a withholding tax of USD 600,000 at the 10 percent rate.

The table below outlines statutory tax rates, calculation bases, and governing regulations across major cross-border capital account remittance categories under Chinese tax law.

Structuring contract tax gross-up provisions using net-of-tax denominator formulas locks execution costs before remittance requests hit commercial banks. Miscalculating exchange rates across transaction milestones exposes taxpayers to late payment surcharges under Article 32 of the PRC Tax Administration Law. That surcharge accrues daily at 0.05 percent of the unpaid tax balance ~ an effective annual rate exceeding 18 percent.

Banks scrutinize paperwork prior to executing transfers, rejecting foreign exchange conversions whenever tax clearance documentation shows currency calculation discrepancies.

Net Taxable Base Formulas for Offshore Remittances

When an offshore parent company receives proceeds from a capital reduction of a domestic Chinese subsidiary, tax rules split the remittance into three accounting components: returned original capital investment, accumulated post-tax earnings, and net capital gain. Returned paid-in capital remits tax-free. The portion representing accumulated post-tax retained earnings is treated as a dividend subject to 10 percent withholding tax, or lower treaty rates.

Any residual amount exceeding paid-in capital and retained earnings constitutes capital gain, taxed at the standard 10 percent rate.

Calculating and filing withholding tax requires following a strict sequence of transactional and administrative steps to prevent delays at the remitting bank.

1. Determine the total transaction consideration in the contract currency, converting any non-cash assets to fair market monetary value.
2. Calculate the deductible historical investment cost basis using verified capital contribution receipts, bank credit notices, or past equity acquisition tax filings.
3. Subtract the deductible cost basis from gross consideration to determine the net taxable gain in the transaction currency.
4. Identify the tax withholding trigger date, defined as the actual payment date or the due date specified in the equity transfer agreement.
5. Obtain the official People’s Bank of China central parity exchange rate for the tax withholding trigger date.
6. Convert the net taxable gain into Renminbi to calculate the exact onshore tax payable amount in Renminbi.
7. Apply statutory withholding rates or reduced tax treaty rates approved by the governing local tax bureau.
8. File the non-resident tax withholding declaration form and transfer tax payments to the tax bureau treasury account within seven calendar days of the withholding obligation date.

Gross-up formulas must factor in value-added tax liabilities whenever transactions involve cross-border debt interest or service fees embedded within equity transfer structures. Value-added tax on cross-border interest payments runs at 6 percent, plus local urban maintenance and educational surcharges totaling roughly 12 percent of the VAT amount. Leaving indirect tax surcharges out of gross-up calculations creates an immediate shortfall during tax settlement, prompting local tax authorities to withhold clearance certificates and stalling capital account remittances beyond bank settlement windows.

Stamp

Navigating administrative clearance for cross-border capital remittances requires coordinating with both the competent tax authority and local commercial banks authorized by the State Administration of Foreign Exchange. Under SAFE Circular 2013 No. 19 and SAFE Circular 2015 No. 13, commercial banks carry direct statutory responsibility for verifying tax clearance documentation before processing foreign currency purchases and offshore transfers. A single missing document can halt foreign exchange execution, leaving funds stuck in domestic bank accounts until tax registration records fully reconcile.

Tax clearance for capital account transactions exceeding USD 50,000 rests on the Tax Record-Filing for Foreign Payments system, governed jointly by Public Notice 2013 No. 40 and Public Notice 2021 No. 19. Taxpayers or withholding agents must complete these filings online or at local tax service halls before submitting foreign currency remittance requests. The resulting Tax Record-Filing Form for Outbound Payments, stamped electronically by the tax bureau, serves as the primary verification key for commercial banks.

Administrative Registration at Local Tax Bureaus

Under Public Notice 2017 No. 37, withholding agents must submit tax withholding declarations within seven days of the contractually defined payment date or actual remittance. The submission packet requires the equity transfer agreement, corporate resolutions, capital verification reports, identity certificates of foreign entities, and official proof of the historical cost basis. Tax authorities review the underlying valuation to confirm equity is not being transferred below fair market value without legitimate commercial justification.

If officers deem transaction pricing unrealistically low, they can exercise discretionary powers under Article 47 of the EIT Law to adjust the tax base using net asset values or valuation reports.

Local tax bureaus operate under decentralized practices, with regional offices routinely asking for supplemental documentation ~ such as audited financial statements of the target Chinese entity dated within 30 days of contract execution, translated legal opinions, and ownership charts tracing ultimate beneficial owners. When transactions involve foreign currency transfers between non-resident entities outside China, the Chinese target entity retains joint tax reporting obligations and must assist local tax bureaus in tracking tax settlement.

Executing foreign exchange remittances for capital account gains without matching electronic tax recordation codes results in automatic bank rejection under current SAFE verification protocols.

Bank compliance desks inspect tax clearance paperwork against strict verification matrices mandated by SAFE. Commercial banks verify that the payer name, recipient name, payment currency, and remittance amount match the figures approved on the Tax Record-Filing Form. Any discrepancy between contract currency and bank payment currency requires an explicit conversion reconciliation statement signed by both the withholding agent and the tax bureau.

Cross Border Payment Tax Recordation Thresholds

Single cross-border payments equivalent to USD 50,000 or less remain exempt from formal tax recordation procedures under Public Notice 2013 No. 40. Exemption from recordation, however, does not eliminate the underlying tax liability. Tax authorities review small transfers retrospectively and aggregate split payments designed to bypass the threshold.

Banks also retain independent discretion to request tax filing receipts for payments below USD 50,000 if transaction descriptions flag capital account operations, equity redemptions, or profit distributions.

Processing at local tax service halls typically takes one to three business days for standard filings backed by complete accounting records. Complex deals ~ such as equity sales priced below net asset value ~ trigger internal tax risk assessments that can extend administrative clearance to four weeks. During these reviews, tax authorities cross-check corporate income tax returns, asset appraisal filings, and intercompany transfer pricing records to verify historical asset appreciation.

Bank Foreign Exchange Clearing Verification Checks

Once tax clearance is complete, withholding agents enter the electronic filing receipt code directly into bank foreign exchange processing portals. Banks then access the State Taxation Administration’s tax-bank data exchange to verify document authenticity in real time. While taxable profit is based on net gain, banks look beyond net figures to confirm that gross settlement balances align with underlying SAFE capital account registrations.

Offshore corporate groups often face friction when trying to execute capital remittances against tight deal deadlines. The list below highlights critical failure modes that block capital account tax clearance during administrative processing.

• Incomplete Cost Documentation prevents tax authorities from recognizing historical capital contributions, leading to tax assessments calculated on gross transaction value.
• Currency Conversion Discrepancies between signed purchase contracts and bank remittance orders trigger automated recordation rejections within the tax portal.
• Unresolved Onshore Tax Audits against the foreign-invested enterprise suspend tax clearance certificate issuance until historical corporate income tax disputes are settled.
• Unverified Valuation Reports submitted for equity transfers below net asset value invite tax authority adjustments that increase overall withholding liability.
• Missing Electronic Signature Seals on corporate resolutions lead to immediate administrative rejection at local tax counters.
• Mismatched Entity Names arising from corporate name changes or missing legal transliterations prevent bank compliance systems from matching tax receipts to foreign bank accounts.

Commercial banks routinely refuse payment execution when foreign entity account names contain character length variances or transliteration errors compared to tax bureau records. Resolving entity name mismatches requires obtaining official apostilled corporate name change certificates and submitting manual translation affidavits to the governing tax bureau. Bank compliance officers will not proceed until the electronic tax recordation portal updates to reflect exact account details.

Taxonomy

Capital account remittances require precise structural categorization because tax treatment varies fundamentally across capital gains, dividend distributions, service fees, and royalties. Taxpayers sometimes attempt to frame equity transfer gains as management service fees or intellectual property royalties to exploit lower treaty rates or deductible expense categories. Chinese tax authorities counter these strategies by scrutinizing substance over form under General Anti-Avoidance Rules (GAAR) set forth in Article 47 of the EIT Law and Public Notice 2015 No. 7, commonly known as Circular 7.

Current account remittances, such as service fees and software licensing royalties, allow the domestic Chinese payer to deduct payments as operating expenses for corporate income tax purposes, subject to value-added tax and 10 percent withholding tax. Capital account remittances ~ including equity sales and capital distributions ~ offer no operating expense deduction for the domestic target entity. Categorizing remittances incorrectly leads to recharacterized payments, disallowed expense deductions, back-tax assessments, and steep late payment surcharges.

Distinguishing Equity Gains from Current Account Revenues

Cross-border corporate restructurings frequently combine equity transfers with consulting agreements, non-compete covenants, or technology licenses. Tax bureaus unbundle these transaction packages during tax clearance reviews. Consideration allocated to non-compete or consulting arrangements executed alongside equity transfers is recharacterized as ordinary service income or capital gains based on where economic activities actually occur.

Service fees paid to foreign parent companies without proof of genuine service delivery inside China are reclassified as constructive dividend distributions, eliminating operating expense deductions for the domestic enterprise.

Equity transfers executed outside China between two foreign entities involving indirect holdings of Chinese real estate or domestic operating companies fall directly under Circular 7. Circular 7 empowers Chinese tax authorities to recharacterize indirect offshore equity transfers as direct transfers of Chinese taxable assets if the offshore holding structure lacks reasonable commercial purpose and was established to avoid Chinese enterprise income tax.

Indirect Capital Asset Transfer Exposure under Circular Seven

Circular 7 establishes clear criteria to evaluate whether an indirect offshore transfer carries genuine commercial substance. If an offshore holding company derives 75 percent or more of its asset value directly or indirectly from Chinese taxable assets, or if 90 percent or more of its income originates in China, tax authorities apply a rebuttable presumption of tax avoidance. When Circular 7 applies, both buyer and seller face joint reporting obligations, and the buyer carries tax withholding duties despite both parties operating entirely outside Chinese territory.

The table below compares assessment parameters, reporting requirements, and withholding consequences between direct Chinese equity transfers and indirect offshore transfers governed by Circular 7.

Evaluating corporate capitalization structures before executing equity transfers helps identify hidden Circular 7 liabilities across multi-tier offshore holding companies. Voluntary reporting under Circular 7 offers significant risk mitigation: if an offshore buyer reports an indirect transfer to the competent Chinese tax bureau within 30 days of contract execution, tax authorities will waive interest penalties even if the structure is later deemed taxable under Chinese law.

Voluntary disclosure under Circular 7 within thirty days mitigates late payment penalties even when tax authorities invalidate offshore holding structures.

Capital reductions represent another critical classification category. When a foreign investor reduces registered capital in a foreign-invested enterprise without liquidating the company, the cash distribution undergoes split-tier tax accounting. Under Public Notice 2011 No. 34, distributions up to the original paid-in capital contribution are treated as a tax-free return of capital.

Payments exceeding paid-in capital consume accumulated retained earnings and are taxed as constructive dividends. Any remaining funds reflect realized equity appreciation, taxed as capital gains.

Tax Allocation in Capital Reductions and Liquidation

Misallocating capital reduction payments across these three tiers distorts withholding tax calculations. Tax bureaus audit capital reductions to verify that distributions do not exhaust paid-in capital while leaving accumulated profits untouched. In practice, profit distributions must occur proportionally before capital reductions can be recorded as tax-free returns of investment.

Offshore parent entities executing group restructurings must systematically evaluate cross-border transactions against statutory tax classification rules. The decision checklist below outlines sequential evaluation points for cross-border capital allocations.

1. Identify Asset Location Properties ~ Determine whether target assets consist of domestic Chinese real property, equity holdings, or mixed operational contracts.
2. Verify Offshore Substance ~ Audit offshore holding entities for physical office presence, local employees, independent board management, and local operational assets.
3. Review Commercial Justification ~ Document business efficiency reasons for offshore transfers outside pure tax minimization motives.
4. Determine Safe Harbor Criteria ~ Confirm whether transactions qualify for internal group reorganization safe harbors under Circular 7 Article 6.
5. Analyze Distribution Components ~ Deconstruct capital reduction distributions into returned paid-in capital, retained earnings allocations, and residual capital gains.
6. Calculate Indirect Tax Surcharges ~ Assess value-added tax and local educational surcharges on embedded service or licensing payments within capital restructuring agreements.

Legal agreements governing cross-border asset sales should incorporate explicit tax allocation clauses binding foreign buyers to Chinese tax reporting rules. Standard foreign equity purchase agreements stipulate: “Buyer shall fulfill all tax reporting and withholding obligations under PRC State Taxation Administration Public Notice 2015 No. 7, and Buyer shall deliver certified official tax clearance receipts to Seller within fifteen days of tax settlement.” Inserting this language prevents buyers from quietly settling tax assessments directly with Chinese authorities and deducting unauthorized tax payments from the final purchase price.

Treaty

China maintains bilateral Double Taxation Agreements (DTAs) with over 100 jurisdictions, offering reduced withholding rates on cross-border capital account remittances. Under standard domestic law, dividend remittances incur a 10 percent withholding rate. Double Taxation Agreements signed with key jurisdictions ~ such as Hong Kong, Singapore, Luxembourg, and the Netherlands ~ reduce dividend withholding to 5 percent, provided the foreign recipient meets strict direct ownership thresholds and beneficial ownership criteria.

Accessing treaty relief requires following self-assessment procedures regulated under Public Notice 2019 No. 35 and beneficial ownership rules under Public Notice 2018 No. 9.

Under the Mainland-Hong Kong Tax Arrangement, a Hong Kong parent company qualifies for the reduced 5 percent dividend withholding rate if it directly holds at least 25 percent of the equity in the Chinese enterprise continuously throughout the 12 consecutive months prior to receiving the dividend. If direct ownership is below 25 percent, or the holding period falls short of 12 consecutive months, the statutory 10 percent rate applies regardless of treaty status.

Reduced Withholding Rates under Bilateral Tax Treaties

Capital gain tax exemptions under tax treaties depend heavily on asset composition. Article 13 of most Chinese tax treaties allocates primary taxing rights on equity gains to the seller’s country of residence, creating a full exemption from Chinese withholding tax. However, treaties preserve China’s statutory 10 percent taxing right if the target entity’s assets consist directly or indirectly of more than 50 percent real property located in China at any point during the 36 months before the sale.

If a foreign investor sells equity in a Chinese company whose land and buildings exceed 50 percent of total asset value, treaty exemptions on capital gains become unavailable.

The table below displays reduced treaty rates and structural qualification parameters across major bilateral tax arrangements signed by Mainland China.

Tax authorities routinely reject treaty claims during post-filing audits whenever commercial substance is lacking. Public Notice 2019 No. 35 abolished administrative pre-approval for tax treaty relief, replacing it with a self-assessment and record-filing system. Non-resident taxpayers evaluate their own eligibility, complete the Non-Resident Taxpayer Tax Treaty Treatment Information Reporting Form, and retain supporting documentation for potential audit.

While self-assessment accelerates execution, it shifts full legal and financial risk onto the taxpayer.

Are Conduit Holdings Eligible for Beneficiary Treaty Relief?

Conduit companies established in tax-favorable jurisdictions without genuine operational substance face immediate disqualification from treaty benefits. Public Notice 2018 No. 9 sets the legal standards for evaluating “Beneficial Owner” (受益所有人) status for dividend, interest, and royalty claims. A beneficial owner must engage in substantive business activities ~ such as manufacturing, trading, or active management.

Pure holding companies whose sole function is holding equity investments undergo rigorous scrutiny under a negative factor assessment framework.

Public Notice 2018 No. 9 establishes five explicit negative factors whose presence indicates an entity is a non-beneficial conduit company:

Negative Factor Assessment Matrix ~ The applicant is obligated to pay over 50 percent of its income to residents of a third country within 12 months; the applicant carries no substantive business operations; the applicant’s operational assets and staff counts are disproportionately small relative to income; the applicant lacks operational control over assets and income; the third-country jurisdiction taxes the income at an effective rate near zero.

If tax authorities identify negative factors during post-filing audits, they revoke treaty relief retroactively, assess back-taxes at the 10 percent statutory rate, and levy daily late payment surcharges under Article 32 of the Tax Administration Law. Establishing treaty eligibility requires proof of substance, making it essential for foreign investors to assemble comprehensive dossiers before submitting self-assessment filings.

Beneficial Owner Evaluation Rules under Bulletin Nine

Public Notice 2018 No. 9 offers a safe harbor provision for dividend treaty claims. If the non-resident entity claiming treaty benefits is a publicly listed company in the treaty jurisdiction ~ or is 100 percent owned directly or indirectly by a qualified resident of that jurisdiction ~ beneficial owner status is granted automatically without detailed operational substance audits. Indirect ownership chains qualify for the safe harbor only if all intermediate holding companies are situated in jurisdictions maintaining tax treaties with China that offer equivalent dividend withholding relief.

Foreign investors applying for reduced withholding tax rates under tax treaties must organize supporting documentation into a structured compliance dossier. The list below details mandatory verification documents required for DTA self-assessment record-filing.

• Tax Resident Certificate issued by the competent tax authority of the treaty partner jurisdiction for the exact tax year of payment execution.
• Equity Ownership Documentation including register of members, share capital verification certificates, and historical equity transfer agreements proving ownership continuity.
• Financial Statements of the offshore entity audited under local accounting standards showing operational assets, payroll expenses, and revenue generation.
• Board Meeting Minutes establishing that strategic management decisions, asset allocations, and dividend re-investments occur within the treaty jurisdiction.
• Commercial Office Lease Agreements and local employment contracts proving physical business presence in the offshore jurisdiction.
• Intercompany Flow-of-Funds Analysis demonstrating that dividend receipts remain under the operational control of the offshore entity rather than flowing automatically to third-country parents.

Unresolved questions surround how Chinese tax bureaus will apply Principal Purpose Tests under the OECD Multilateral Instrument (MLI), which China ratified in 2022. The MLI inserts a broad anti-abuse provision into China’s existing tax treaties, empowering tax authorities to deny treaty relief if obtaining that benefit was one of the principal purposes of an offshore arrangement or transaction. Whether tax bureaus will use MLI provisions to invalidate legacy intermediate holding structures established prior to 2022 remains an operational uncertainty that corporate legal counsel must monitor during cross-border profit extraction planning.

Windup

Deregistering a Foreign-Invested Enterprise (FIE) and remitting remaining equity capital and liquidation surpluses represents the final stage of capital account execution. Under PRC Company Law Articles 180 through 190 and the EIT Law Implementation Regulations, liquidating a Chinese subsidiary requires completing a formal statutory sequence: public creditor notifications, asset liquidation, labor severance settlements, tax clearance audits, and SAFE capital account cancellation. Unpaid taxes block foreign currency purchases, making tax clearance the primary bottleneck in entity wind-downs.

Liquidation proceeds distributed to foreign investors undergo three-part tax accounting. The liquidation committee compiles a final balance sheet reflecting realized asset sales and settled liabilities. Assets remaining after paying liquidation expenses, employee severance, outstanding social security contributions, and local taxes constitute total net liquidation proceeds.

The foreign investor must categorize these proceeds before requesting cross-border remittance approval from commercial banks.

Liquidation Proceeds Prioritization and Tax Deductions

Net liquidation proceeds paid to a foreign parent entity fall into three categories: a tax-free return of registered capital up to the historical paid-in investment cost; dividend income equal to the foreign investor’s share of undistributed post-tax retained earnings; and liquidation capital gain equal to any residual funds exceeding original capital and retained earnings. Retained earnings distributed during liquidation trigger dividend withholding tax at statutory (10 percent) or treaty-reduced rates (5 percent). Residual capital gains trigger standard 10 percent withholding under EIT Law Article 19.

Executing liquidation distributions requires liquidating entities to navigate multi-tier statutory audits. Local tax bureau audits of historical transfer pricing records during cross-border equity repurchases can significantly extend tax clearance timelines. Tax bureaus inspect historical transfer pricing under Article 41 of the EIT Law, auditing intercompany payments, service fee deductions, and cross-border royalty expenses made prior to liquidation announcement dates.

Tax Clearance Audit Procedures for Entity Liquidation

Before issuing a formal Liquidation Tax Clearance Certificate (清税证明), the local tax authority conducts a comprehensive tax audit covering the preceding three-year window ~ and up to ten years for transfer pricing adjustments. Tax auditors verify that the liquidating enterprise fully settled corporate income tax, local property taxes, stamp duties, value-added taxes, and employee individual income tax withholdings. Any historical tax deficiency must be paid in full, along with late payment surcharges, before the tax bureau signs off on corporate deregistration.

If historical tax audits reveal unrecorded liabilities or invalid expense deductions, tax authorities issue back-tax assessment notices directly to the liquidation committee. Directors on the liquidation committee bear personal liability under PRC Corporate Law for premature distribution of company assets before complete tax settlement. Once the tax clearance certificate is secured, the liquidation committee submits the tax certificate, audited liquidation report, and SAFE capital account registration forms to the remitting bank.

Remittance Clearance and Foreign Exchange Exit Verification

Commercial banks conduct final foreign exchange clearance verification under SAFE Circular 2013 No. 19 rules. The bank verifies that total capital account remittances do not exceed the net liquidation value confirmed in the audited liquidation report and matching tax clearance certificates. Upon verifying document consistency, the bank executes the foreign currency transaction, remits proceeds to the foreign investor’s offshore account, cancels the enterprise’s Foreign Exchange Capital Account, and issues a SAFE deregistration confirmation slip.

The enterprise then surrenders its business license to the State Administration for Market Regulation, completing legal entity termination.