1、 analysis of A-share equity investments through the QFI mechanism and Stock Connect for offshore investors outside the Chinese MainlandCurrently,the capital market in the Chinese Mainland is not fully open.For offshore investors,they need to invest in the mainland capital market through specified ch

2、annels.Under the existing connectivity regimes between the Chinese Mainland and Hong Kong SAR,offshore investors are able to invest in mainland financial markets through the Qualified Foreign Institutional Investor(QFI)mechanism,Shanghai-Hong Kong Stock Connect(Stock Connect),Bond Connect and Mutual

3、 Recognition of Funds.In June 2022,the China Securities Regulatory Commission(CSRC)issued the Announcement on the Inclusion of Exchange Traded Funds(ETFs)into Stock Connect1,which allowed investors from the Chinese Mainland and Hong Kong to trade the eligible shares and ETFs listed on each others ex

4、change through local securities companies or brokers,providing an additional channel for offshore investors to invest in A-shares.In addition to the traditional QFI channel,offshore investors may gain equity exposure in the Chinese Mainland by investing in ETFs through Northbound Stock Connect.Tax c

5、osts directly impact the returns of investors.For offshore investors who invest in A-shares equity assets,the tax implications under different investment channels could vary.In this article we set out the analysis and comparison of the tax costs through the QFI channel and Stock Connect(specifically

6、 the Northbound ETFs Investments).1 Announcement on the Inclusion of Exchange Traded Funds into Stock Connect(CSRC Announcement 2022 No.39)2Tax analysis of A-share equity investments through the QFI mechanism and Stock Connect for offshore investors outside the Chinese Mainland 2022 KPMG Advisory(Ch