Last checked at 18 Nov 2014 07:42
db x-trackers
Investment Company with variable capital
Registered office: 49, avenue J.F. Kennedy, L-1855 Luxembourg
R.C.S. Luxembourg B-119.899
(the "Company")
db x-trackers Harvest CSI300 INDEX UCITS ETF (DR) ("Sub-Fund")
1D: LU0875160326
17 November 2014
The board of directors of the Company hereby informs the shareholders of the Sub-Fund that material information concerning the taxation of China A shares (which are the constituent securities of the Reference Index) has been reported clarifying the taxation on A shares investments by renminbi qualified foreign institutional investors ("RQFIIs").
Capitalised terms used in this notice shall have the meaning ascribed to them in the current Prospectus of the Company unless the context otherwise requires.
The Ministry of Finance (the "MoF") of the People's Republic of China ("PRC"), the State Administration of Taxation of the PRC ("SAT") and the China Securities Regulatory Commission (the "CSRC") issued the "Notice on the issues of temporary exemption from the imposition of capital gains tax arising from gains from the transfer of equity investment assets such as PRC domestic stocks by QFII and RQFII" Caishui [2014] No.79 on 14 November 2014 (the "Tax Announcement").
The Tax Announcement states that PRC corporate income tax will be imposed on gains obtained by qualified foreign institutional investors ("QFIIs") and RQFIIs from the transfer of equity investment assets (including PRC domestic stocks) realised prior to 17 November 2014 ("capital gains tax") in accordance with the relevant tax laws and regulations. The Tax Announcement also states that QFIIs and RQFIIs without an establishment or a place of business in the PRC will also be temporarily exempt from corporate income tax on gains derived from the trading of A shares effective from 17 November 2014.
As described in the current Product Annex of the Sub-Fund, prior to the date of this notice, the Board of Directors makes a provision of 10% for the account of the Sub-Fund in respect of any potential tax on capital gains from investments of the Sub-Fund in A shares issued by companies which qualify as "land rich companies". A company is treated as a "land rich company" if the value of its immovable property in the PRC is more than 50% of its total assets. Investors should note that such provision may be excessive or inadequate to meet actual PRC tax liabilities on investments made by the Sub-Fund.
On the basis of the information set out in the Tax Announcement, the Management Company has determined to:
(a) make a provision of 10% for the account of the Sub-Fund in respect of the Sub-Fund’s gross realised capital gains derived from trading of A-Shares since the Sub-Fund’s date of inception up to and including 14 November 2014. This excludes the realised gains derived from the Sub-Fund’s trading of A-Shares issued by "land rich companies" (for which a provision has already been made). This will have a negative impact on the Net Asset Value of the Sub-Fund; and
(b) reverse the provision in respect of the Sub-Fund's gross unrealised capital gains derived from investment in A-Shares issued by land rich companies made prior to 17 November 2014. This will have a positive impact on the Net Asset Value of the Sub-Fund,
the net impact of (a) and (b) is positive and is referred to as the "Withholding". For illustration purposes, the estimated and unaudited positive impact of the Withholding to the Net Asset Value of the Sub-Fund will be approximately USD 476,355.72 (or approximately 0.07% of the Net Asset Value as of 14 November 2014).
The impact of the Withholding is reflected in the Net Asset Value of the Sub-Fund as of 17 November 2014 (expected to be published no later than 18 November 2014). Shareholders who have sold or redeemed shares in the Sub-Fund prior to 17 November 2014 will not be affected by the Withholding.
Due to the limited extent of the clarifications provided in the Tax Announcement, the Management Company, acting in the best interest of the Sub-Fund, takes a prudent approach to withhold capital gains tax for all capital gains realised before 17 November 2014 until further clarification is obtained. This means that the Withholding (in USD terms) is expected to be kept constant unless there is further material information regarding the tax position in the PRC. The Management Company has come to the decision after considering a range of factors including the Tax Announcement.
With the above in consideration, the Management Company decided not to rely on tax treaty relief in determining the Withholding until further clarification in relevant PRC tax rules and regulations.
Considering the Tax Announcement, it is the current intention of the Management Company not to make new provision for gross realised or unrealised capital gains derived from trading of A-Shares from 17 November 2014 onwards.
If you have any queries or if any of the above is not clear, you should seek advice from your stockbroker, bank manager, legal adviser, accountant or other independent financial advisor.
Shareholders should also consult their own professional advisers as to the specific tax implications under the laws of the countries of their nationality, residence, domicile or incorporation.
Please note that a translation of this notice will be made available, where required, on the website of the Company, being www.etf.db.com. Further information in relation to the above may also be obtained from the legal entities mentioned under ‘Contact information’ below or by sending an email to info.dbx-trackers@db.com.
Neither the contents of the Company's website nor the contents of any other website accessible from hyperlinks on the Company's website is incorporated into, or forms part of, this announcement.
db x-trackers
The board of directors
Contact information
db x-trackers
49, avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg
DB Platinum Advisors
2, boulevard Konrad Adenauer, L-1115 Luxembourg, Grand Duchy of Luxembourg
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