In the third place， provisions contained in Circular 698， share transfer income refers to difference between share transfer price and share cost. Share transfer price includes all sum received by share transfer assignors. In the event of invested enterprises have non-allocated profit or various funds after tax profit drawing， the invested enterprises shall not deduct aforesaid income sum from share transfer price. Cost of shares refers to real contribution sum paid by share transfer assignor to Chinese domestic company， or transfer sum paid to original assignors in the time when assignors purchased these shares.

　　对未来企业海外上市及并购的影响　Influence to the Oversea IPO''s and M&A

　　由于698号函自2008年1月1日起追溯执行，新的通知不可避免的对大量用离岸公司在中国境内投资的境外投资者，产生新的管理和披露的义务。因此对于境外投资者在上述期间发生有转让中国居民企业股权行为的，应重新审视境外投资者所取得的股权转让所得是否已经按照本通知的规定计算并申报企业所得税（直接转让）或向被转让股权的中国居民企业所在地主管税务机关提交了相关的证明资料（间接转让）。然而，如何698号函仍有许多地方是模糊的，如：界定国外国家和地区的实际税负少于12.5%、SAT如何知道境外企业的股权转让等。我们仍需观察针对上述问题的具体实施措施。

　　As the Circular 698 enforced from January 1， 2008， the new rule will significantly impact a great number of foreign investor which use the offshore vehicle to invest in PRC as it potentially imposes the new onerous administrative and disclosure obligation on foreign non-resident investors. Non-resident enterprises shall review the transfer condition of Chinese domestic enterprises to decide the next step whether to calculate and submit the enterprise income tax (direct transfer) or to submit the relevant document to Local Tax Authorities in the place where Chinese domestic enterprises located (indirect transfer). However， some issues in Circular 698 still remain to be clarified such as， how to define an “actual tax burden being lower than 12.5%”， how will SAT become aware of a share transfer which take place offshore. We need some time to observe the measures implemented in the future to clarify the above issues.