International Tax Co-leader Mark Chaves wrote about the US tax implications of selling a Chinese entity for Ecovis International
By Mark Chaves, Partner, International Tax Co-Leader
United States (US) corporations, in particular, have been actively investing in Chinese entities, leading to intricate tax implications when these companies decide to divest these assets. The US Tax Cuts and Jobs Act (TCJA) of 2017 profoundly changed these tax dynamics. One such change was the introduction of a tax deduction for dividends received from certain foreign subsidiaries that are at least 10 percent owned. This has raised questions for US corporations with investments in China regarding how these provisions interplay with the tax implications when selling the stock of a Chinese subsidiary.