Tax impact on Fosun and SJKII : a) U.S. Tax : the Interest and dividend income are taxed as ordinary income . b) China Tax: Dividends is subject to withholding tax of 5%,while interest income is subject to a withholding tax of 7%.
Tax impact on the WOFE: Interest expense is deductible, while dividends are not.
Business matters: Interest is paid even the WOFE is not "profitable" and is paid only to Fuson and SJKII, while dividends are paid only when the WOFE is profitable and the WOFE has enough cash to pay BOTH the minority investors and SJKII & Fosun.
Tax impact on the WOFE: Interest expense is deductible, while dividends are not.
Business matters: Interest is paid even the WOFE is not "profitable" and is paid only to Fuson and SJKII, while dividends are paid only when the WOFE is profitable and the WOFE has enough cash to pay BOTH the minority investors and SJKII & Fosun.