In the practice of mergers & acquisitions and initial public offerings, it is quite normal for one party to use an associated company that is registered in a tax-haven state or territory to fulfill this transaction. Such an offshore holding company is a vehicle incorporated for the sole purpose of tax evasion. Since 2009, the Chinese government has enhanced its tax collection related to such cases. Circular 698, published in 2009 by the State Administration of Taxation of the People’s Republic of China, and many public cases in practice show the development of China’s taxing the indirect transfer of equity interest in mainland China. This indicates the increasing alertness of tax authorities to opportunities to tax indirect share transfers, especially in cases in which the business purpose of the structure is not obvious.