{"id":11889,"date":"2026-07-09T16:08:55","date_gmt":"2026-07-09T08:08:55","guid":{"rendered":"https:\/\/www.qicaiying.cn\/?p=11889"},"modified":"2026-07-09T16:08:59","modified_gmt":"2026-07-09T08:08:59","slug":"%e9%99%8c%e9%99%8c%e8%a1%a5%e7%a8%8e5-47%e4%ba%bf%ef%bc%81%e8%b7%a8%e5%a2%83%e7%94%b5%e5%95%86%e6%9c%80%e5%b8%b8%e7%94%a8%e7%9a%84%e9%a6%99%e6%b8%af%e6%9e%b6%e6%9e%84%ef%bc%8c%e5%8f%af%e8%83%bd","status":"publish","type":"post","link":"https:\/\/www.qicaiying.cn\/en\/archives\/11889","title":{"rendered":"Momo Pays 547 Million in Back Taxes! The Hong Kong Structure Most Commonly Used by Cross-Border E-Commerce Companies May No Longer Be Safe"},"content":{"rendered":"<p>Many cross-border e-commerce business owners follow a \u201cclassic structure\u201d:<\/p>\n\n\n\n<p>We have an operations team on the mainland and a company registered in Hong Kong;<br>Funds from the platform are first transferred to a Hong Kong account and then returned to the mainland in the form of service fees, procurement payments, dividends, and other means;<br>Externally, it\u2019s called a \u201ccross-border structure,\u201d but internally, it\u2019s really just a \u201cpayment clearinghouse.\u201d<\/p>\n\n\n\n<p>People used to think this was perfectly normal:<\/p>\n\n\n\n<p>\u201cThat\u2019s what everyone else in the industry does.\u201d<br>\u201cHong Kong has low tax rates, and it\u2019s easy to collect payments there.\u201d<br>\u201cAs long as the company is registered, the bank account is opened, and the contract is signed, it\u2019s considered compliant.\u201d<\/p>\n\n\n\n<p>However, a recently disclosed case has served as a wake-up call for all companies that rely on the Hong Kong structure.<\/p>\n\n\n\n<p>Zhiwen Group, the publicly listed entity associated with Momo that is well known to the public, stated in its Q2 2025 disclosure: Its domestic WFOE, Beijing Momo, received a notice from Chinese tax authorities requiring it to withhold and remit withholding income tax at the standard rate of 10% when paying or accruing dividends to its Hong Kong parent company, rather than the previously applicable preferential rate of 5%. Consequently, the company recognized an additional withholding tax provision of 547.9 million yuan, of which 356.1 million yuan relates to dividends already paid in 2024 and the first half of 2025, while the remaining 191.8 million yuan relates to undistributed retained earnings as of March 31, 2025.<\/p>\n\n\n\n<p>For ordinary small and medium-sized enterprises, this figure may seem out of reach.<\/p>\n\n\n\n<p>However, the regulatory logic behind this is very similar to that faced by many cross-border e-commerce businesses, foreign trade companies, and platform sellers.<\/p>\n\n\n\n<p><strong>Tax authorities are no longer concerned with whether you\u2019ve set up a structure, but rather whether that structure is supported by genuine business activities.<\/strong><\/p>\n\n\n\n<p>Simply registering a company, opening a bank account, and signing a few agreements is no longer sufficient to demonstrate compliance.<\/p>\n\n\n\n<p>The real challenge that cross-border businesses will face in the future is not whether or not they have a Hong Kong company, but rather:<\/p>\n\n\n\n<p>Does your Hong Kong company actually have any employees?<br>Is there office space available?<br>Is there any actual business?<br>Is there any risk involved?<br>Have any actual decisions been made?<br>Do you have the ability to negotiate on your own?<br>Why Are Profits Kept in Hong Kong?<br>Why are the fees charged from Hong Kong?<br>Why does capital flow this way?<\/p>\n\n\n\n<p>If these questions are not answered clearly, the so-called \u201clow-tax structure\u201d could turn into a tax risk.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">I. Why did the 5% preferential rate change to the 10% standard rate?<\/h4>\n\n\n\n<p>Many business owners may not understand:<\/p>\n\n\n\n<p>\u201cIf a Hong Kong company holds a mainland company, shouldn\u2019t it be eligible for the 5% preferential tax rate on dividends? Why did it end up being 10%?\u201d<\/p>\n\n\n\n<p>There is a key concept here:<strong>Beneficial Owner<\/strong>The<\/p>\n\n\n\n<p>Simply put, for a Hong Kong company to benefit from the preferential dividend tax rate under the Mainland-Hong Kong tax arrangement, it cannot merely hold shares in name only; it must also prove that it is the true beneficial owner of the dividends.<\/p>\n\n\n\n<p>Generally, when Chinese resident enterprises pay dividends to foreign shareholders, a withholding tax rate of 10% applies. The preferential tax rate of 5% applies only if the foreign shareholder is a qualified Hong Kong tax resident, is the beneficial owner of the dividends, and directly holds at least 25% of the equity in the company paying the dividends.<\/p>\n\n\n\n<p>Please note: this is an \u201copportunity,\u201d not an \u201cautomatic benefit.\u201d<\/p>\n\n\n\n<p>The tax authorities will look further into:<\/p>\n\n\n\n<p>Is a Hong Kong company just an intermediary?<br>Is the money received transferred to other entities very quickly?<br>Does the company have actual employees and assets?<br>Do you have business management skills?<br>Are there any actual business risks involved?<br>Was this structure set up just to take advantage of the agreement's benefits?<\/p>\n\n\n\n<p>The State Taxation Administration\u2019s rules regarding \u201cbeneficial owners\u201d also explicitly state that even if an applicant qualifies as a beneficial owner, the relevant general anti-avoidance rules must still be applied if the \u201cprincipal purpose test\u201d provisions of a tax treaty or the general anti-avoidance rules under domestic tax law are to be applied; The determination of beneficial owner status under the provisions regarding dividends, interest, and royalties in the Mainland-Hong Kong tax arrangement shall also be carried out in accordance with the relevant announcements.<\/p>\n\n\n\n<p>In other words:<\/p>\n\n\n\n<p><strong>Merely meeting the formal shareholding requirement does not necessarily mean that one will actually be eligible for the preferential treatment.<\/strong><\/p>\n\n\n\n<p>This is precisely where many cross-border businesses are most likely to make misjudgments.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">II. Why Should Cross-Border E-Commerce Be Especially Vigilant?<\/h4>\n\n\n\n<p>On the surface, Momo is an internet company, while cross-border e-commerce is a retail business\u2014so it seems as though they aren\u2019t in the same industry.<\/p>\n\n\n\n<p>However, from a tax structure perspective, much of the logic is the same.<\/p>\n\n\n\n<p>A common path for many cross-border sellers is:<\/p>\n\n\n\n<p>Register a company in Hong Kong;<br>Link a Hong Kong company to a platform or payment tool;<br>Proceeds from overseas sales are deposited into a Hong Kong account;<br>The domestic team is responsible for product selection, operations, customer service, purchasing, and shipping;<br>Hong Kong companies may pay procurement fees, service fees, or consulting fees to mainland companies, or retain profits overseas.<\/p>\n\n\n\n<p>This approach isn't necessarily out of the question.<\/p>\n\n\n\n<p>The problem is that many Hong Kong companies are merely \u201cshells\u201d with no \u201csubstance.\u201d<\/p>\n\n\n\n<p>Common situations include:<\/p>\n\n\n\n<p>There are no employees in Hong Kong;<br>No physical office space;<br>There is no actual procurement team;<br>No local customer service;<br>No independent operational decision-making;<br>Does not bear commercial risks such as inventory, market, or pricing risks;<br>The contract was signed in Hong Kong, but all actual business operations were conducted on the mainland;<br>Profits remain in Hong Kong, but value creation occurs primarily on the mainland.<\/p>\n\n\n\n<p>In this case, once the tax authorities conduct a look-through audit, they will likely ask:<\/p>\n\n\n\n<p>\u201cWhy should profits stay in Hong Kong?\u201d<\/p>\n\n\n\n<p>\u201cWhat value have Hong Kong companies actually contributed?\u201d<\/p>\n\n\n\n<p>\u201cThe domestic team did most of the work, yet the overseas entity reaped the lion\u2019s share of the profits. What\u2019s the business logic behind that?\u201d<\/p>\n\n\n\n<p>If you can't answer these questions, problems are likely to arise with the architecture.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">III. The greatest danger is not \u201chaving a Hong Kong company,\u201d but treating a Hong Kong company as a panacea<\/h4>\n\n\n\n<p>Many business owners have a very simplistic understanding of Hong Kong companies:<\/p>\n\n\n\n<p>\u201cIf I register a company in Hong Kong, I can pay lower taxes.\u201d<br>\u201cOnce the money is in Hong Kong, it's safe.\u201d<br>\u201cAs long as income earned overseas isn\u2019t brought back to China, there\u2019s no need to worry about it.\u201d<br>\u201cIf you list it as a service fee in the contract, you can funnel the profits out.\u201d<br>\u201cIf others are doing it this way, I\u2019ll just follow suit.\u201d<\/p>\n\n\n\n<p>These ideas are all risky under the current regulatory environment.<\/p>\n\n\n\n<p>A Hong Kong company can be a tool for compliance, but it can also become a risk amplifier.<\/p>\n\n\n\n<p>It all depends on how you use it.<\/p>\n\n\n\n<p>If a Hong Kong company genuinely performs functions such as overseas procurement, overseas market expansion, customer service, brand management, financial settlement, and cross-border trade coordination, and has the corresponding personnel, contracts, financial records, decision-making documentation, and audit trails, then this arrangement is commercially reasonable.<\/p>\n\n\n\n<p>However, if a Hong Kong company serves merely as a receiving account\u2014with all owners, goods, funds, and business operations located on the mainland, yet profits are channeled to Hong Kong\u2014it can easily be deemed a \u201cconduit company\u201d or deemed to lack commercial substance.<\/p>\n\n\n\n<p>Bosses must understand:<\/p>\n\n\n\n<p><strong>Tax authorities do not object to companies setting up cross-border structures; rather, they oppose structures that lack substantive business operations and are established solely to take advantage of low tax rates or shift profits.<\/strong><\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">IV. With the advent of global tax transparency, offshore accounts are no longer \u201cinformation black boxes\u201d<\/h4>\n\n\n\n<p>In the past, many companies believed that:<\/p>\n\n\n\n<p>\u201cThe money is in an overseas account, so it shouldn\u2019t be visible in China.\u201d<\/p>\n\n\n\n<p>That view is outdated.<\/p>\n\n\n\n<p>The CRS, or Common Reporting Standard, facilitates the exchange of tax-related information on cross-border financial accounts. The scope of information available to tax authorities includes the names of accounts held by businesses and individuals at foreign financial institutions, taxpayer identification numbers, addresses, account numbers, account balances, as well as information on interest, dividends, and proceeds from the sale of financial assets.<\/p>\n\n\n\n<p>This means that when it comes to overseas accounts, overseas dividends, returns on overseas investments, and cross-border capital flows, it is becoming increasingly inappropriate to rely on the notion of \u201cinvisibility\u201d to assess risk.<\/p>\n\n\n\n<p>In addition, global anti-tax avoidance rules continue to advance. The Hong Kong Inland Revenue Department has also clarified that, starting in 2025, Hong Kong will implement the global minimum tax in accordance with the BEPS 2.0 framework and introduce the Hong Kong Minimum Top-up Tax; These rules target specific large multinational enterprise groups and aim to ensure that they bear a minimum tax burden of at least 15% in each jurisdiction where they operate, thereby reducing the incentive for multinational groups to shift profits to low-tax or zero-tax jurisdictions.<\/p>\n\n\n\n<p>Although the vast majority of small and medium-sized cross-border sellers do not currently meet the eligibility threshold for the global minimum tax, the trend is already clear:<\/p>\n\n\n\n<p><strong>Global tax regulation is shifting from a focus on \u201csurface-level structures\u201d to a focus on \u201csubstantive business operations.\u201d<\/strong><\/p>\n\n\n\n<p>Today, the focus of scrutiny is on major corporations and large conglomerates, but tomorrow it may gradually extend to medium-sized cross-border businesses, foreign trade companies, and platform sellers.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">V. The 3 Red Lines Cross-Border E-Commerce Businesses Are Most Likely to Cross<\/h4>\n\n\n\n<h5 class=\"wp-block-heading\">1. Hong Kong companies are shell companies that serve only as a conduit for funds.<\/h5>\n\n\n\n<p>This is the most common\u2014and most dangerous\u2014problem.<\/p>\n\n\n\n<p>To facilitate payment collection, many companies register in Hong Kong. Funds from the platform are first deposited into a Hong Kong account and then transferred back to the mainland through channels such as procurement payments, service fees, loans, and dividend distributions.<\/p>\n\n\n\n<p>If a Hong Kong company lacks actual personnel, physical office space, genuine business operations, and real decision-making processes, and serves only as a conduit for funds, it is difficult to account for the source of its profits.<\/p>\n\n\n\n<p>Once a business is determined to lack commercial substance, the preferential tax rates, fee arrangements, and profit distributions it previously enjoyed may all be subject to re-examination.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">2. Unreasonable prices for related-party transactions, artificially retaining profits in low-tax jurisdictions<\/h5>\n\n\n\n<p>Many cross-border businesses have their Hong Kong companies charge their mainland companies for:<\/p>\n\n\n\n<p>Brand licensing fees;<br>Technical service fee;<br>Management Service Fee;<br>Purchasing spread;<br>Consulting fees;<br>Platform operation service fee.<\/p>\n\n\n\n<p>It's not that these fees can't be charged.<\/p>\n\n\n\n<p>However, three questions must be answered:<\/p>\n\n\n\n<p>Did the service actually take place?<br>Are the fees reasonable?<br>Does this comply with the arm's-length principle?<\/p>\n\n\n\n<p>If a Hong Kong company is merely a shell entity but charges mainland companies high service fees, or if the mainland team performs the bulk of the work but the Hong Kong company takes the lion\u2019s share of the profits, this can easily be deemed a profit shift.<\/p>\n\n\n\n<p>Tax authorities may adjust related-party transactions and repatriate unreasonable profits to China.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\">3. Focusing solely on the \u201cregistration framework\u201d without implementing \u201cchain of custody management\u201d<\/h5>\n\n\n\n<p>Many business owners assume that as long as an architecture diagram looks good, it\u2019s compliant.<\/p>\n\n\n\n<p>But the tax authorities don't look at PowerPoint presentations\u2014they look at evidence.<\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<p>Do Hong Kong companies have employment contracts?<br>Are there any payroll records?<br>Is there an office lease agreement?<br>Are there any local business contracts?<br>Are there any records of communications with clients?<br>Are there any records of procurement negotiations?<br>Are there any records of board or management decisions?<br>Do you have separate bank statements?<br>Is there a logical basis for generating actual profits?<br>Are there any accounting records that correspond to the actual business operations?<\/p>\n\n\n\n<p>If none of this documentation is available, it is very difficult to support a cross-border structure based solely on a business license, a contract, and a bank account.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">VI. Cross-border businesses must conduct a self-assessment today<\/h4>\n\n\n\n<p>If your business already has companies in Hong Kong, Singapore, the British Virgin Islands (BVI), the Cayman Islands, or the United States, or if you are currently using an offshore company to receive payments, we recommend that you begin a self-assessment today.<\/p>\n\n\n\n<p>Don't rush to overhaul the architecture right away; first, make sure you have clear answers to these questions.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">1. What exactly are the functions of an offshore company?<\/h5>\n\n\n\n<p>Is it in charge of procurement?<br>In charge of sales?<br>In charge of the brand?<br>In charge of customer service?<br>Are you in charge of fund settlements?<br>In charge of overseas markets?<br>Are you in charge of supply chain coordination?<\/p>\n\n\n\n<p>If the answer is simply \u201cit\u2019s convenient for receiving payments,\u201d you should be wary.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">2. Why are profits kept overseas?<\/h5>\n\n\n\n<p>There must be a business reason for retaining profits overseas.<\/p>\n\n\n\n<p>For example, overseas companies handle functions such as market development, customer retention, procurement negotiations, brand management, after-sales service, and inventory risk management.<\/p>\n\n\n\n<p>If the majority of value is created domestically but profits remain overseas, the risks need to be reassessed.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\">3. Are the transactions between domestic and foreign entities genuine?<\/h5>\n\n\n\n<p>When a Hong Kong company charges a mainland company a service fee, are there any actual services provided?<\/p>\n\n\n\n<p>A mainland company is issuing an invoice to a Hong Kong company. Is there a contract and a delivery involved?<\/p>\n\n\n\n<p>When an overseas company purchases goods from a domestic company, do the flows of goods, funds, contracts, and invoices match up?<\/p>\n\n\n\n<p>If the sole purpose is to get the money back by retroactively issuing a contract and an invoice, the risks would be very high.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">4. Have the beneficial owner\u2019s details been fully prepared?<\/h5>\n\n\n\n<p>If a mainland company is distributing dividends, paying interest, or paying royalties to a Hong Kong company and wishes to take advantage of tax treaty benefits, it must prepare the relevant information regarding the beneficial owner in advance.<\/p>\n\n\n\n<p>Including, but not limited to:<\/p>\n\n\n\n<p>Certificate of Hong Kong Tax Residency;<br>Explanation of the Shareholding Structure;<br>Status of personnel and assets;<br>Business Operations Data;<br>Minutes of Board of Directors Meetings;<br>Revenue and cash retention status;<br>Are there any expedited payment arrangements in place?;<br>Whether it serves a legitimate business purpose.<\/p>\n\n\n\n<p>These materials should not be prepared only after the tax authorities ask for them; rather, they should be planned well in advance of the business transactions.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">5. Do the transaction records for overseas accounts and the domestic tax returns provide consistent explanations?<\/h5>\n\n\n\n<p>What cross-border businesses fear most is not high transaction volumes, but rather transaction volumes that cannot be properly accounted for.<\/p>\n\n\n\n<p>Platform revenue collection, overseas accounts, domestic procurement, service fee payments, profit distribution, shareholder loans, and dividend arrangements must all form a logical closed loop.<\/p>\n\n\n\n<p>If large amounts of funds remain idle in overseas accounts for an extended period, while the domestic company consistently reports minimal profits or even losses, special attention must be paid to the risk of tax interpretation issues.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">VII. The right approach is not to \u201cdo away with Hong Kong companies,\u201d but to ensure that the structure is appropriate for the business<\/h4>\n\n\n\n<p>Cases like these are not meant to tell companies:<\/p>\n\n\n\n<p>\u201cDon't register a Hong Kong company in the future.\u201d<\/p>\n\n\n\n<p>On the contrary, Hong Kong companies, overseas entities, and offshore structures still hold practical value in cross-border business.<\/p>\n\n\n\n<p>It can be used for receiving payments from overseas, international trade settlements, signing contracts with overseas clients, expanding a brand\u2019s global presence, securing overseas financing, supply chain management, and regional business expansion.<\/p>\n\n\n\n<p>But the premise is:<\/p>\n\n\n\n<p><strong>Architecture should support real business operations, not replace them.<\/strong><\/p>\n\n\n\n<p>Companies need to shift from the past \u201cregistration-oriented\u201d approach to a \u201csubstance-oriented\u201d one.<\/p>\n\n\n\n<p>In the past, we only asked:<\/p>\n\n\n\n<p>Where are taxes low?<br>Where can I open an account quickly?<br>Where is it convenient to receive payments?<\/p>\n\n\n\n<p>Now, ask more questions:<\/p>\n\n\n\n<p>Where does the business take place?<br>Where do the employees work?<br>Who bears the risk?<br>Who Generates Profits?<br>Who is responsible for performing the contract?<br>Who makes the decision?<br>Can this be substantiated with documentation?<\/p>\n\n\n\n<p>Only by clearly addressing these issues can a cross-border structure be made more stable.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">VIII. The 3 Most Important Things Cross-Border Business Owners Should Do<\/h4>\n\n\n\n<h5 class=\"wp-block-heading\">1. Start by conducting an architecture health check<\/h5>\n\n\n\n<p>Compile a complete list of all existing domestic and overseas companies:<\/p>\n\n\n\n<p>Who are the shareholders?<br>Who receives the payment?<br>Who signs the contract?<br>Who issues the invoice?<br>Who handles purchasing?<br>Who's in charge of operations?<br>Who gets the profits?<br>Who bears the risk?<\/p>\n\n\n\n<p>As soon as many companies map out their operations, they discover problems: there are many companies, but their functions are disorganized; there are many accounts, but the profit structure is unclear; and there are many contracts, but there is insufficient evidence of performance.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">2. Provide the necessary substantive documentation for a Hong Kong company or an overseas company<\/h5>\n\n\n\n<p>If the overseas company does indeed perform business functions, evidence of this must be retained.<\/p>\n\n\n\n<p>Example:<\/p>\n\n\n\n<p>Office Address;<br>Staffing;<br>Local service providers;<br>Business Contracts;<br>Customer communication;<br>Procurement Records;<br>Management Decisions;<br>Bank flow;<br>Financial Statements;<br>Audit materials.<\/p>\n\n\n\n<p>Don\u2019t let overseas companies remain merely \u201con paper.\u201d<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">3. Reevaluate profit repatriation channels<\/h5>\n\n\n\n<p>Many cross-border companies handle the repatriation of profits in a very arbitrary manner.<\/p>\n\n\n\n<p>Today it\u2019s service fees, tomorrow it\u2019s procurement payments, the day after tomorrow it\u2019s loans, and by year-end they\u2019re already thinking about dividends.<\/p>\n\n\n\n<p>This approach can easily create potential problems.<\/p>\n\n\n\n<p>Different repatriation methods correspond to different tax types, different filing obligations, and different documentation requirements.<\/p>\n\n\n\n<p>Companies should choose a path based on their actual business operations, rather than simply looking for the option with the lowest tax burden.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">put at the end<\/h5>\n\n\n\n<p>A tax adjustment of 547 million yuan seems like something that would happen to a major corporation.<\/p>\n\n\n\n<p>But what cross-border business owners really need to be aware of is:<\/p>\n\n\n\n<p><strong>Tax oversight has shifted from \u201cchecking whether you have a company\u201d to \u201cchecking whether the company has substance.\u201d<\/strong><\/p>\n\n\n\n<p>A Hong Kong company isn't the risk\u2014it's becoming a shell company that is the risk;<br>Cross-border structures aren't the problem; the lack of a business purpose is the problem;<br>It\u2019s not that you can\u2019t take advantage of tax incentives; the key is whether you meet the eligibility requirements;<br>It\u2019s not necessarily a bad thing to keep profits overseas; the key is whether the value created is commensurate.<\/p>\n\n\n\n<p>For cross-border e-commerce businesses, the old, rudimentary approach of \u201cregistering a Hong Kong company + receiving payments from overseas + operating within China + retaining profits overseas\u201d must be reevaluated.<\/p>\n\n\n\n<p>If you don\u2019t conduct a self-inspection today, you may find yourself having to explain things tomorrow.<\/p>\n\n\n\n<p>A truly stable company isn\u2019t one that lacks a structure; rather, it\u2019s one where the structure, business operations, funding, contracts, personnel, and profits all make sense in relation to one another.<\/p>\n\n\n\n<p>We recommend that all business owners involved in cross-border e-commerce, foreign trade, overseas payment collection, Hong Kong corporate structures, red-chip structures, and the retention of overseas profits conduct a tax compliance review as soon as possible.<\/p>\n\n\n\n<p>Many risks aren\u2019t unsolvable; the problem is that we can\u2019t keep putting off addressing them until we\u2019re faced with inquiries, audits, or back taxes.<\/p>\n\n\n\n<p>If you have friends who are involved in cross-border e-commerce, foreign trade exports, or receiving payments into overseas accounts, I recommend sharing this article with them.<\/p>\n\n\n\n<p>Some architectures seem very classic;<br>But today, it may no longer be safe.<\/p>\n\n\n\n<p><em><mark style=\"background-color:rgba(0, 0, 0, 0);color:#abb8c3\" class=\"has-inline-color\">Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce support and agency operations\u2014all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (<mark>For inquiries, call 16620947137 or add us on WeChat: Qicaiyingjituan<\/mark>).<\/mark><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"600\" src=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg\" alt=\"\" class=\"wp-image-6232\" style=\"width:313px;height:auto\" srcset=\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880.jpg 600w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-300x300.jpg 300w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-150x150.jpg 150w, https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/01\/20260115154051880-12x12.jpg 12w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure>","protected":false},"excerpt":{"rendered":"<p>\u5f88\u591a\u8de8\u5883\u7535\u5546\u8001\u677f\u90fd\u6709\u4e00\u4e2a\u201c\u7ecf\u5178\u67b6\u6784\u201d\uff1a \u5185\u5730\u6709\u8fd0\u8425\u56e2\u961f\uff0c\u9999\u6e2f\u6ce8\u518c\u4e00\u5bb6\u516c\u53f8\uff1b\u5e73\u53f0\u56de\u6b3e\u5148\u8fdb\u9999\u6e2f\u8d26\u6237\uff0c\u518d\u901a\u8fc7\u670d\u52a1\u8d39\u3001 [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":11899,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_yoast_wpseo_focuskw":"\u8de8\u5883\u7535\u5546\u7a0e\u52a1\u5408\u89c4\u3001\u9999\u6e2f\u516c\u53f8\u7a0e\u52a1\u98ce\u9669\u3001\u53d7\u76ca\u6240\u6709\u4eba\u8ba4\u5b9a\u3001\u8de8\u5883\u5229\u6da6\u56de\u6d41\u3001\u7ea2\u7b79\u67b6\u6784\u7a0e\u52a1\u98ce\u9669\u3001\u8de8\u5883\u7535\u5546\u9999\u6e2f\u67b6\u6784\u3001CRS\u7a0e\u52a1\u76d1\u7ba1\u3001\u4f01\u4e1a\u7a0e\u52a1\u5408\u89c4\u81ea\u67e5","_yoast_wpseo_title":"","_yoast_wpseo_metadesc":"","_yoast_wpseo_opengraph-title":"","_yoast_wpseo_opengraph-description":"","footnotes":""},"categories":[17,18,64],"tags":[1535,1536,1537,1538,1145],"class_list":["post-11889","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allguide","category-recomguide","category-gf-tax-compliance","tag-1535","tag-1536","tag-1537","tag-1538","tag-1145"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - 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