China Relaxes Conditions for Special Tax Treatment of Assets and Liabilities in Corporate Restructuring Transactions

China's State Administration of Taxation has issued Announcement No. 13 of 2026, which concerns the special tax treatment for corporate restructuring transactions, including mergers and divisions. Special tax treatment is essentially a tax deferral mechanism. Under general tax treatment, when an enterprise restructures, it must treat the transfer of assets or equity as a taxable event based on fair market value, recognizing immediate gains or losses. However, if a transaction qualifies for s…