Posted on "equity transfer income personal income tax management approach (Trial)" notice

Posted on "equity transfer income personal income tax management approach (Trial)" notice
Ref: State Administration of Taxation Announcement No. 67, 2014
Issued: State Administration of Taxation

Now "The resulting equity transfer Individual Income Tax management (tentative)" to be promulgated for implementation from January 1, 2015.
Special announcement.

State Administration of Taxation ?
December 7, 2014

The resulting equity transfer Individual Income Tax management (tentative)

Chapter I General Provisions
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In order to strengthen equity transfer income individual income tax collection and management, standardize the tax authorities, taxpayers and withholding agents levied behavior, safeguard the legitimate rights and interests of taxpayers, according to "People's Republic of China Individual Income Tax Law" and its implementing regulations, "China people's Republic of tax collection and management law "and its implementing regulations, development of this approach.
The second term of the shareholders' equity is a natural person (hereinafter referred to as individuals) to invest in the business or organization established in China (hereinafter referred to investee companies, excluding individual proprietorship and partnership) or equity shares.
The third term of the equity transfer refers to an individual share transfer to the behavior of other individuals or legal persons, including the following scenario:
(A) the sale of shares;
(Ii) the company to repurchase shares;
(3) when the issuer IPO, shareholders will be invested enterprise of its shares in a public offering for sale to investors;
(Iv) equity interests of the judicial or administrative authorities divestitures;
(V) Foreign equity investments or other non-monetary transactions;
(Vi) equity to cover the debt;
(7) Other equity transfer behavior.
Article personal transfer of ownership to the balance of the equity transfer income minus the original value of equity and reasonable expenses for the taxable income, according to the "transfer of property income" to pay personal income tax.
Reasonable costs refer to the relevant taxes in accordance with the equity transfer payments.
Article personal income equity transfer of personal income tax, taxpayers equity transferor to the transferee as the withholding agent.
Article withholding agent shall share transfer five working days after the signing of the agreement related to the transfer of shares of the relevant report for the tax authorities.
Invested enterprise shall be recorded in detail the costs associated with the shareholders who hold corporate equity, and truthfully provide information on the share transfer, to assist tax authorities in carrying out public duties.
The second chapter of the equity transfer income confirmation
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Article VII of the equity transfer income refers to the transfer of shares by the transferor cash acquired, kind, securities and other forms of economic interests.
Article VIII of the transferor to make all kinds of payments related to the transfer of shares, including liquidated damages, compensation payments and other items, assets, rights and interests, the equity transfer income shall be incorporated.
Article 9 For taxpayers in accordance with the contract, the subsequent revenue made after meeting the agreed conditions, the transfer of shares should be treated as income.
Article X of the equity transfer income shall be determined in accordance with the principles of fair trade.
Article XI of the following circumstances, the competent tax authorities approved the equity transfer income:
(A) declare the share transfer income is significantly lower and unjustified;
(2) failing to file tax returns within the prescribed period, the tax authorities ordered deadline to declare overdue refuses to file;
(C) the transferor can not provide or refuses to provide information on the equity transfer of income;
(Iv) other income approved the equity transfer case.
Article XII of the following circumstances, regarded as the equity transfer income is significantly lower:
(A) declare the share transfer income is lower than the corresponding share of net assets of equity. Among them, the company has invested land use rights, buildings, real estate business is not real estate, intellectual property rights, prospecting and mining rights, equity and other asset sales, equity transfer income declared is less than the fair value of the net assets of the corresponding equity;
(Ii) the equity transfer income declared is less than the initial investment cost or below to obtain the price paid by the equity and related taxes;
(C) the equity transfer income declared is less than the same or similar conditions the same shareholders of the same company or other shareholders' equity transfer income;
(Iv) equity transfer income declared is less than the same or similar conditions similar industry enterprises equity transfer income;
(V) non-rationality of free shares or transferring shares;
Other circumstances (vi) the tax authorities identified.
Article XIII equity transfer income meets one of the following conditions is significantly lower, regarded as justified:
(A) be able to produce valid documents to prove that the invested enterprises due to the national policy adjustment, production and management to be significantly affected, leading to low-cost transfer of ownership;
(B) the inheritance or transfer its stake to its partner to provide legally valid proof of identity relationship, parents, children, grandparents, grandchildren, children, grandchildren, siblings and assume direct custody or maintenance obligations for the assignor custody person or dependents;
(Iii) the relevant legislation, government documents or the provisions of the articles of association, and the relevant information is not sufficient to prove the internal transfer of foreign equity transfer price is reasonable and the enterprise's employees held for sale;
(Iv) equity transfer both able to provide valid evidence to prove that any other reasonable circumstances rationality.
Article 14 The competent tax authority shall in turn approved the equity transfer income in accordance with the following methods:
(A) the net assets of the approved method
Approved in accordance with the equity transfer income share of net assets or net assets per share, corresponding to equity.
By total assets ratio of land use rights invested enterprises, housing and real estate companies are not selling real estate, intellectual property rights, prospecting and mining rights, equity and other assets of enterprises accounted for more than 20%, the tax authorities can refer to the taxpayers with legal qualifications the agency issued the asset appraisal report approved the equity transfer income.
Recurrence within 6 months of transfer of shares and net assets are invested no significant change, the tax authorities can refer to when the share transfer was approved the share transfer income on an investment company's assets assessment report.
(B) Analogy
1. Referring to the same business or under the same conditions the same shareholders or other shareholders' equity transfer approved similar income;
Under the same or similar industries and enterprises equity transfer income approved 2. Similar reference.
(Iii) any other reasonable method
Tax authorities using the above method approved difficulties equity transfer income, can take other reasonable method approved.
Chapter III confirmed the original value of equity
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Article 15 of the original value of the transfer of ownership in accordance with the following methods to confirm:
(A) shares acquired in cash, and reasonable taxes in accordance with the actual payment directly related to the acquisition of the equity stake and confirmation of the original value;
(B) equity investment in non-monetary assets acquired, according to the tax authorities or the approved investment shares when the price of non-monetary assets directly related to the acquisition of the equity stake in reasonable taxes and confirmation of the original value;
(C) acquired by way of transferring free shares, with the circumstances listed in Article 13 of the second term, according to a reasonable tax equity happened with the original holders of the original value of the equity stake and confirm the original value;
(Iv) are invested enterprise capital reserve, surplus reserve and undistributed profits into share capital, individual shareholders have to pay personal income tax law to increase by transferring the amount and related taxes and confirmation of its new original equity share capital value;
(E) In addition to these circumstances, the tax authorities in accordance with the principle of avoiding duplicate individual income tax be reasonably recognized equity at cost.
Article XVI share transfer has been approved for the equity transfer income tax authorities and individual income tax law, reasonable taxes and share transfer occurred when the original value of the equity stake in the transferee to achieve equity by the competent tax authorities equity transfer income and confirmation.
Article 17 A transfer of ownership did not provide complete and accurate original value of equity certificates, can not correctly calculate the original value of equity by the competent tax authorities of its original value of equity.
Article XVIII repeatedly made the same individual when the invested enterprise equity transfer of part of the shares, using the "weighted average method" to determine the original value of its equity.
Chapter IV tax returns
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Article XIX equity transfer personal income personal income tax to be invested tax authority where the enterprise to the tax authorities.
Article XX of the following circumstances, the withholding agent, the taxpayer shall pay taxes according to the law declared to the tax authorities within 15 days of the month:
(A) the transferee already paid or partially paid equity transfer price;
(Ii) the equity transfer agreement has been entered into force;
(C) the transferee already enjoying the actual performance of duties or shareholder equity;
(Iv) the national authorities judgment, registration or announcement in force;
(E) of Article III of the way to conduct the seventh completed;
Other evidence (vi) the tax authority finds that the circumstances indicate that the equity transfer has occurred.
Article 21 Taxpayers and withholding agents to the competent tax authorities for the equity transfer tax (withholding) the declaration shall also submit the following information:
(A) equity transfer contract (agreement);
(B) the transfer of shares both proof of identity;
(C) we are required to conduct asset valuation, the need for intermediary institutions with legal qualifications issued by the land and real estate assets or net asset value assessment report;
(Iv) tax basis is significantly lower but justifiable proof material;
(E) the competent tax authorities of other materials submitted.
Article 22 of the invested enterprise shall, within five working days after the conclusion of the board of directors or shareholders, to the competent tax authorities related to the matter of changes in equity shareholders' meeting or the Board of Directors, meeting minutes and other information.
Invested enterprises are changed or changes in ownership held by individual shareholders individual shareholders, within 15 days of the month to the competent tax authorities of changes in the information contained shareholders' personal income tax basic information table (A table) "and shareholder change instructions.
Tax authority shall be promptly invested enterprises to verify their circumstances change in shareholding, and confirm the transfer of income, and promptly withholding agents and taxpayers to fulfill legal obligations.
Article 23 The transfer of shares in currencies other than RMB settlement, in accordance with the settlement date of the RMB exchange rate, converted into RMB taxable income.
Chapter V Collection and Management
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Article 24 The tax authorities should strengthen cooperation with the business sector, implement and improve the information exchange system equity, active equity transfer information sharing.
Article 25 The tax authority shall establish an equity transfer of personal income tax electronic ledger, the relevant information into the collection and management information systems of individual shareholders, strengthening inter-per-share transfer equity transfer income and equity at cost logical review of the implementation of share transfer dynamic chain management.
Article 26 The tax authorities shall implement the system of information exchange and sharing of good tax departments, tax departments, and improve equity registration information application ability.
Article 27 The tax authorities shall strengthen the equity transfer income personal income tax the daily management and tax inspection, and actively promote the transfer of shares of each tax collaborative management.
Article 28 A taxpayer or withholding agent and portfolio companies are not in accordance with the prescribed time limit for tax (withholding) declaration and submit the relevant information, in accordance with the "People's Republic of China on Tax Collection and Management Law" and its implementation details of the relevant provisions deal with.
Article 29 of the country by way of government procurement of services, the introduction of intermediaries involved in the evaluation process share transfer related assets.
Chapter VI Supplementary Provisions
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Article 30 individuals in the Shanghai Stock Exchange, Shenzhen Stock Exchange listed company transfer from the public offering and the transfer market has made shares of listed companies, the transfer of restricted shares, as well as other special provisions of the share transfer does not apply to these measures.
Article 31 provinces, autonomous regions, municipalities and Municipal Local Taxation Bureau according to this approach, with local conditions, formulate specific measures for implementation.
Article 32 These Measures shall go into effect January 1, 2015. "State Administration of Taxation of personal income tax notice on strengthening the management of equity transfer income" (Guo Shui Han [2009] No. 285), "the State Administration of Taxation on the equity transfer Individual Income tax based on the approved issues notice" (State Administration of Taxation Announcement 2010 No. 27) shall be repealed simultaneously.