| |
| |
| |
|
|
|
|
|
|
Analysis on Tax Involved in Stock Equity Transfer
Stock equity transfer is civil legal acts that a shareholder in a company transfers its equities according to law to transferee and makes transferee enjoy the equities of these stocks. Stock equity transfer, a kind of real right change act, must be registered before taking legal effect of rights transfer in China. In market economy, during stock equity transfer, transferer usually pays certain consideration to transferee, that is to say transferee gain concrete benefits through stock equity transfer. During stock equity transfer, signing a Stock Equity Transfer Agreement is needed, which makes clear regulations on the rights and obligations of transferer and transferee and of which the regulations on transfer price is the basis of paying taxes. Now, as far as the compensated transferring of stock equity is concerned, we will brief the tax involved in stock equity transfer.
In China, stock equity transfer is exempt from business tax and surtax, but stamp duty and income tax are mainly levied.
In the aspect of collection of stamp duty, a listed company shall transfer its stocks in a formal stock exchange organization, and the transferer shall pay tax at 1 ‰ of the volume of business; a non-listed company shall pay stamp duty in accordance with the transfer price in Stock Equity Transfer Agreement and the rate is 0.5‰ of the transfer price written in the Agreement, not pay stamp duty because of the behavior of stock equity transfer that the stock form is changed. During the process of stock right decentralized allot revolution, the stock equity transfer caused by a holder of non-tradable stocks paying considerations to a holder of tradable stocks is exempt from stamp duty for a time.
The individual shareholder, who transfers stock equity, shall pay taxes for his income of transferring stock equity according to Personal Income Tax. The tax payable shall be the balance of the income amount of stock equity transfer minus the original property and reasonable costs, of which the original property is the fee transferer paid to obtain the stock equity; reasonable costs refers to the relevant fee paid according to law when transferring the stock equity. The rate of the personal income tax is 20% for individual stock equity transfer.
The enterprise shareholder, who transfers stock equity, shall pay taxes for his income according to Enterprise Income Tax Law of the People’s Republic of China and the Release of Regulations on the Implementation of Enterprise Income Tax Law. The tax payable shall be the part of the income amount of the enterprise transferring its stock equity minus the net value1. A listed company fulfills its stock equity transfer by the form of stock transaction, its income of transferring stock equity shall be calculated according to stock turnover; the income of transferring its stock equity not by the form of stock usually shall be determined according to Stock Equity Transfer Agreement. Non-resident enterprise2, which has not established the organization and establishment within the Chinese territory or has established the organization and establishment, but its income has no actual relationship with the organization and establishment set up by itself, shall be taxed at the rate of 20% for its income of transferring stock equity. Others shall be taxed at 25%.
Except the above general terms of taxation, stock equity transfer also refers to some special regulations. The penalty on individual stock equity transfer shall be counted in the payable tax amount, and shall be applied to the responsible taxation authority by itself. In case transferer withdraws the transferred stock equity and the registration of alteration of stock equity has been handled, it is regarded as the act of transfer comes into being, the taxation shall be paid according to law; registration of alteration is not yet handled, transferer cannot achieve profits, and shall not pay income tax.
----------------------------------------------------------------------------------------------------------------
1.The net value means the balance of taxation basis of related assets and property deducting the depreciation, the loss, the apportionment, the provision fund.
2.Non-resident enterprises shall refer to Enterprises that are set up in accordance with the law of the foreign country (region) whose actual administration institution is outside China, but they have set up institutions or establishments in China or they have income originating from China without setting up institutions or establishments in China.
|
|
|
|
|
|
