Entity Setup
How China’s Reform on Enterprise Reorganization Rules Opens New Doors for Restructuring
Recent policy relaxations make it easier for companies—especially those with complex shareholder structures—to qualify for favorable tax treatment during mergers, splits, and reorganizations.
By NomadicTax Research Team • 5-8 min read • September 3, 2026
## What’s New in Enterprise Reorganization Tax Rules
In **公告2026年第13号**, the Chinese tax authorities revised how **special tax treatments** apply to enterprise reorganizations (mergers, splits) effective **from January 1, 2026**. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai)) Key changes include:
- Threshold to trigger special treatment: resident-company shareholders holding **over 50% aggregate stake** (instead of previously 100%) may reach consistent tax treatment status. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai))
- Expanded eligible shareholder types—natural persons, partnerships, asset management entities (契约型资管产品), non-resident enterprises are now clearly included in the rolled-up stock. ([chinatax.gov.cn](https://www.chinatax.gov.cn/chinatax/n810219/n810724/c5251170/content.html?utm_source=openai))
## Impacts and Strategic Opportunities
### ✅ Reduced Operational Hurdles
Companies with many shareholders (including non-resident or institutional) find it difficult to get **100% unanimous agreement**. Relaxing to **over 50% agreement** means more reorganizations can now qualify.
### ⚠ Conditions to Watch
- Among the agreeing shareholders, residents must include those holding **at least 5% individual stakes**, and the **top ten resident shareholders** must be among them. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai))
- After reorganizing, those agreeing shareholders **cannot transfer their new shares for 12 months**; early transfers may void special treatment. ([fgk.chinatax.gov.cn](https://fgk.chinatax.gov.cn/zcfgk/c100012/c5251155/content.html?utm_source=openai))
### 💡 Example Scenario
A large listed company with 10 resident shareholders and many non-resident or institutional investors: previously, unless everyone consented, it couldn’t get favorable tax deferral treatment. Now, if resident shareholders holding >50% agree—including representative 5% or top-10 shareholders—it qualifies.
## Key Actions for Planning
- Perform **shareholder mapping** to identify resident vs non-resident, and percentage stakes.
- Secure **formal consensus** among qualifying resident shareholders—including 5% holders & top-10.
- Ensure share transfer restrictions are clear in legal documents for 12 months post reorganization.
- Choose whether assets/liabilities to be treated under special or general treatment (which affects timing and tax recognition).
## Broader Implications
- Boosts merger & acquisition activity by lowering tax cost and procedural barriers.
- Encourages resource consolidation and industrial optimization.
- Improves certainty & compliance for entities with mixed shareholders.
**Key takeaway:** If you're planning a merger or split in China and have complex ownership, these reforms make special tax treatment vastly more accessible—provided you meet new thresholds and avoid share transfers during the restriction period.