Law360, New York (March 30, 2015, 10:26 AM EDT) -- In 2009, China's State Administration of Taxation (SAT) promulgated Circular 698 to empower the People's Republic of China tax authorities to recharacterize transfers by non-PRC residents of shares in offshore companies that hold equity interests in Chinese companies as direct transfers of such Chinese companies and impose a 10 percent capital gains tax on such transfers, if tax authorities determine that the arrangement lacks reasonable commercial purpose and is aimed at avoiding PRC tax. Since its promulgation, Circular 698 has had a wide impact on foreign investments in China via offshore intermediate holding companies, such as in the case of many private equity and venture capital investments....