Circular on Properly Carrying out the Administration of Collection of Individual Income Tax on Income from the Transfer of Restricted Stocks
Circular on Properly Carrying out the Administration of Collection of Individual Income Tax on Income from the Transfer of Restricted Stocks
Circular on Properly Carrying out the Administration of Collection of Individual Income Tax on Income from the Transfer of Restricted Stocks
Guo Shui Fa [2010] No.8
January 15, 2010
Local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, and the local offices of the State Administration of Taxation in Tibet Autonomous Region, Qinghai Province and Ningxia Hui Autonomous Region,
Upon approval by the State Council, individual income tax shall be collected from individuals who transfer their restricted stocks of a listed company as of January 1, 2010. The relevant matters are hereby notified as follows in accordance with the provisions of the Circular of the Ministry of Finance, the State Administration of Taxation and the China Securities Regulatory Commission on Issues concerning the Collection of Individual Income Tax on Income from the Transfer by Individuals of Their Restricted Stocks of Listed Companies (Cai Shui [2009] No.167) to properly carry out the administration of collection of individual income tax on income from the transfer of restricted stocks:
I. Provisions on the Administration of Tax Collection
Different measures shall be adopted for the administration of collection of tax on income from the transfer of restricted stocks which are formed at different stages in light of the completion of the technological or institutional preparation work of the securities institutions.
1. The individual income tax on the income from the transfer of restricted stocks formed prior to the completion of the technological or institutional preparation work of the securities institutions shall be collected by the combination of withholding and prepayment by the securities institutions and filing and settlement by taxpayers themselves.
(1) Withholding, prepayment and filing by securities institutions
If a taxpayer transfers any shares of a restricted stock formed during the stock reform, the securities institution shall compute the transfer income according to the closing price of the stock on the re-listing date after the stock reform. If a taxpayer transfers any new shares of the restricted stock, the securities institution shall compute the transfer income according to the closing price on the first date of listing of the stock, determine the original value of the shares and the reasonable taxes and fees at 15% of the transfer income computed, subtract the original value and reasonable taxes and fees from the transfer income, take the difference as the taxable income, and compute and pre-withhold the individual income tax.
The securities institution shall pay the individual income tax it has withheld to the competent tax authority within the first seven days of the following month and submit the Form of Withheld Individual Income Tax Return for the Income from the Transfer of Restricted Stocks (see Appendix I) and other materials as required by the tax authority. A separate Form of Withheld Individual Income Tax Return for the Income from the Transfer of Restricted Stocks shall be filled out for each taxpayer and for each different stock. The income from the transfer of the same stock to be filled in the aforesaid form shall be the aggregate amount obtained during the current month.
(2) Filing and settlement by taxpayers themselves
If there is any discrepancy between taxable income, which is computed by a taxpayer on the basis of the actual transfer income and the actual cost, and the tax withheld and prepaid by the security institution, the taxpayer shall, within three months of the first day of the following month after the withholding and prepayment of the tax by the securities institution, file a settlement application with the competent tax authority of the place where the securities institution is located, and handle the matters relevant to the filing and settlement of tax.
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Guo Shui Fa [2010] No.8
January 15, 2010
Local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, and the local offices of the State Administration of Taxation in Tibet Autonomous Region, Qinghai Province and Ningxia Hui Autonomous Region,
Upon approval by the State Council, individual income tax shall be collected from individuals who transfer their restricted stocks of a listed company as of January 1, 2010. The relevant matters are hereby notified as follows in accordance with the provisions of the Circular of the Ministry of Finance, the State Administration of Taxation and the China Securities Regulatory Commission on Issues concerning the Collection of Individual Income Tax on Income from the Transfer by Individuals of Their Restricted Stocks of Listed Companies (Cai Shui [2009] No.167) to properly carry out the administration of collection of individual income tax on income from the transfer of restricted stocks:
I. Provisions on the Administration of Tax Collection
Different measures shall be adopted for the administration of collection of tax on income from the transfer of restricted stocks which are formed at different stages in light of the completion of the technological or institutional preparation work of the securities institutions.
1. The individual income tax on the income from the transfer of restricted stocks formed prior to the completion of the technological or institutional preparation work of the securities institutions shall be collected by the combination of withholding and prepayment by the securities institutions and filing and settlement by taxpayers themselves.
(1) Withholding, prepayment and filing by securities institutions
If a taxpayer transfers any shares of a restricted stock formed during the stock reform, the securities institution shall compute the transfer income according to the closing price of the stock on the re-listing date after the stock reform. If a taxpayer transfers any new shares of the restricted stock, the securities institution shall compute the transfer income according to the closing price on the first date of listing of the stock, determine the original value of the shares and the reasonable taxes and fees at 15% of the transfer income computed, subtract the original value and reasonable taxes and fees from the transfer income, take the difference as the taxable income, and compute and pre-withhold the individual income tax.
The securities institution shall pay the individual income tax it has withheld to the competent tax authority within the first seven days of the following month and submit the Form of Withheld Individual Income Tax Return for the Income from the Transfer of Restricted Stocks (see Appendix I) and other materials as required by the tax authority. A separate Form of Withheld Individual Income Tax Return for the Income from the Transfer of Restricted Stocks shall be filled out for each taxpayer and for each different stock. The income from the transfer of the same stock to be filled in the aforesaid form shall be the aggregate amount obtained during the current month.
(2) Filing and settlement by taxpayers themselves
If there is any discrepancy between taxable income, which is computed by a taxpayer on the basis of the actual transfer income and the actual cost, and the tax withheld and prepaid by the security institution, the taxpayer shall, within three months of the first day of the following month after the withholding and prepayment of the tax by the securities institution, file a settlement application with the competent tax authority of the place where the securities institution is located, and handle the matters relevant to the filing and settlement of tax.
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