Letter Submitted to Shanghai Municipal Tax Service (State Taxation Administration) on the debt-to-equity ratio applied to Equipment Leasing Companies (ELC)

2022-01-28 | Beijing, Shanghai

On Friday 28 January 2022, the Non-Banking Financial Institutions (NBFI) working group sent a letter to Shanghai Municipal Tax Service State Taxation Administration to draw their attention to the debt-to-equity ratio applied to equipment leasing companies (ELC). 

Informed  by  the  Chamber’s  Non‐Banking  Financial  Institutions  (NBFI)  working  group  chair of Changning district Tax  Bureau’s interest in non‐banking  finance and equipment leasing, the European Union Chamber of Commerce in China agreed to prepare a short report on European equipment leasing companies (ELC)  in China. 

In  December  2021,  the  European  Chamber  invited  its  ELC  members  in  China  to  take  part  in  a benchmarking exercise to obtain data on their related party debt‐to‐equity ratio to support their case in front of the tax bureau.

The Chamber advocated using the same thin‐capitalization ratio (5:1) for leasing companies as for financial institutions.