China Strengthens Scrutiny over Tax Treatment of Equity Transfers by Individuals


On December 7, 2014, the State Administration of Taxation of China (SAT) promulgated the Administrative Measures for Individual Income Tax on Equity Transfer Incomes (for Trial Implementation) (“Circular 67”). Circular 67 became effective January 1, 2015.

Circular 67 establishes a basic legal guideline for individual income tax (“IIT”) collections and reporting requirements, which would apply when individual shareholders transfer equity interests in Chinese companies to any other party. It also clarifies various regulations with respect to individual shareholders transferring equity interests, including an itemized list of equity transfer scenarios, the assessment of equity transfer income, the valuation of equity interests, and tax reporting formalities relating to these equity transfers.

To read the full publication, click on the PDF linked below.


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