Tax Planning
Corporate Restructuring Made Easier: Expanded Tax Breaks for M&A Deals in 2026 China
China eases restrictions on special tax treatment for enterprise restructuring—lowering shareholder consent thresholds, expanding eligible parties, and offering smoother compliance paths.
By NomadicTax Research Team • 6 min read • August 25, 2026
## Background
China has long offered **优惠税务处理 (special tax treatment)** in corporate restructuring cases, such as mergers or demergers, to ease tax pain from valuation gains. However, the requirement that **100%** of resident enterprise shareholders agree often blocked the relief. The State Taxation Administration’s Announcement No. 13, 2026 (国家税务总局公告2026年第13号) fixes that, with effect from **January 1, 2026**. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai))
## New Rule Highlights
- The minimum ownership threshold among **agreeing resident enterprise shareholders** is reduced from **100% to at least 50%** in aggregate to access special tax treatment. ([chinatax.gov.cn](https://www.chinatax.gov.cn/chinatax/n810219/n810724/c5251170/content.html?utm_source=openai))
- The rule also widens the scope of eligible participants to include different types of entities, such as non-resident enterprises, contract-based asset management products, and partnership enterprises. ([chinatax.gov.cn](https://www.chinatax.gov.cn/chinatax/n810219/n810724/c5251170/content.html?utm_source=openai))
- If the threshold is met, only the part of the transaction involving agreeing shareholders is treated with special treatment; other parts follow general tax rules. ([chinatax.gov.cn](https://www.chinatax.gov.cn/chinatax/n810219/n810724/c5251170/content.html?utm_source=openai))
- If shareholders who qualified for special treatment transfer their acquired shares within **12 months** after restructuring, the special treatment can be reversed, triggering taxes. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai))
## Example Scenario
- Company A (a resident enterprise) is merging with B. Previously, all shareholders of A needed to agree for special treatment. Under the new rule, as long as resident enterprise shareholders holding at least 50% agree, their portion of the deal can use the special tax treatment. Shares owned by non-resident shareholders or those who do not agree are taxed under the standard method.
- Suppose 60% of shareholders agree: those 60% get special treatment, allowing deferred or reduced recognition of gains. The other 40% must follow general treatment immediately.
## Planning Tips
- **Assess shareholdings**: identify which shareholders are resident enterprise entities, non-resident, natural persons, or asset-management structures, and their preferences.
- **Get written agreements** early**, especially around timing and irrevocability of agreements among shareholders.
- **Avoid rapid disposal**: selling shares acquired through restructuring within 12 months may void benefits.
- **Engage valuation specialists** to determine fair values of assets, liabilities, and assess what portion qualifies under special vs general treatment.
## Broader Impacts
- Boosts feasibility of corporate reshaping — mergers, spin-offs, consolidations — by **reducing shareholder unanimity burden**.
- Helps **listed companies** or those with diffuse ownership, where unanimity was previously impractical.
- Lowers tax cost and improves financial planning for restructuring, aligning China with global norms around tax neutrality in reorg.
## Conclusion
For enterprises planning reorganizations, the new rules offer meaningful tax relief—if correctly structured. Understanding eligibility, timelines, and shareholder alignment is now more important than ever. This may be your best window yet for tax-efficient restructuring in China’s evolving M&A landscape.