Momo's parent company, Zhiwen Group, was required to pay an additional tax of RMB 547.9 million. Domestic companies previously withheld tax at a preferential rate of 5% when distributing dividends to Hong Kong-related entities; however, tax authorities determined that the Hong Kong entities did not qualify as “beneficial owners,” requiring the rate to be reverted to 10%. All business owners with offshore or red-chip structures must now exercise caution. Previously, simply layering entities in the Cayman Islands, BVI, or Hong Kong allowed companies to claim tax benefits—but regulators are now cracking down. Do these overseas entities actually have employees, assets, and genuine business operations?