1. Main issues related to taxation of individual holding and transfer of stocks
How should individuals hold and transfer company shares for tax treatment? Before we can answer this question, we need to clarify some specific situations:
1. Is the stock a listed company or a non-listed company (NEEQ)?
2. Tradable shares or restricted shares?
3. How long does the stock hold?
4. Holding and transferring shares of overseas listed companies through Shanghai-Hong Kong Stock Connect?
5. What taxes are involved in the holding process, such as dividends?
6. What taxes are involved in the transfer?
7. How to deal with tax-related issues?
2. List of taxes related to the holding and transfer of shares of listed companies by individuals
To boil it down:
Domestic: In the case of dividends, domestic listed companies will be subject to differential taxation of individual tax, 20%, 10%, 0
In the case of stock transfer, it is 0; Transfer of 20% of restricted shares.
If it is an overseas stock, the dividend is 20%, regardless of whether it is H shares or not, whether it is transferred through Shanghai-Hong Kong Stock Connect, and if it is Shanghai-Hong Kong Stock Connect, it is exempt from individual income tax. Otherwise, 20% is paid. Pay attention to the stamp duty of HK.
In general, Shanghai-Hong Kong Stock Connect can achieve the effect of domestic stock transfer on behalf of the tax-free.
In the case of dividends, only there is a differentiated collection in China, and there is no such policy overseas, which is 20%.
The same is true for all other domestic and foreign countries.
3. Tax returns
1. Individuals hold dividends and dividends on the shares of domestic listed companies
Domestic listing refers to the listing and issuance of shares on the Shanghai Stock Exchange (the main board of the Shanghai Stock Exchange, the Science and Technology Innovation Board), the Shenzhen Stock Exchange (the small and medium-sized board of the Shenzhen Stock Exchange, the Growth Enterprise Market), and the Beijing Stock Exchange (innovative small and medium-sized enterprises on the Beijing Stock Exchange).
When a listed company distributes dividends and dividends, if it holds shares for less than 1 year (including 1 year) for individuals, the listed company will not withhold individual income tax for the time being; When an individual transfers shares, the securities depository and clearing company calculates the tax payable according to the holding period, and the securities company and other share custodians shall deduct and transfer it from the personal fund account and transfer it to the securities depository and clearing company, and the securities depository and clearing company shall transfer it to the listed company within 5 working days of the following month, and the listed company shall declare and pay the tax to the competent tax authority within the statutory declaration period of the month in which the tax is received.
Policy basis:
(1) Articles 1 and 2 of the "Cai Shui [2015] No. 101).
(2) 《《Cai Shui [2012] No. 85)
2. Individual income tax on the transfer of restricted shares of domestic listed companies
According to different transfer situations, a combination of withholding and prepayment by securities institutions, self-declaration and liquidation by taxpayers and direct withholding by securities institutions or self-declaration by taxpayers shall be adopted.
If the taxpayer declares and pays taxes by himself, the taxpayer shall file a declaration with the in-charge tax authority within seven days of the following month after transferring the restricted shares.
The income obtained from the transfer of restricted shares by an individual shall be subject to individual income tax at a proportional rate of 20% according to the "income from property transfer".
For the transfer of restricted shares by an individual, the taxable income shall be the income from the transfer of each restricted share, after deducting the original value of the restricted shares and reasonable taxes.
The original value of restricted shares refers to the purchase price of restricted shares at the time of purchase and the relevant fees paid in accordance with regulations.
Reasonable taxes and fees refer to stamp duty, commissions, transfer fees and other taxes related to the transaction incurred in the process of transferring restricted shares.
If the taxpayer fails to provide a complete and true certificate of the original value of the restricted shares, and cannot accurately calculate the original value of the restricted shares, the in-charge tax authorities shall verify the original value of the restricted shares and reasonable taxes and fees at 15% of the income from the transfer of the restricted shares.
In the event of a send, transfer or reduction of shares, the original value of the cost of restricted shares shall be adjusted according to the ratio of sending, transferring or reducing shares.
If the taxpayer holds both restricted shares and tradable shares, the transfer of shares shall be regarded as the first transfer of restricted shares.
Policy basis:
(1) Articles 1, 3 and 6 of the "Cai Shui [2009] No. 167).
(2) (CS [2010] No. 70)
3. Mainland individuals hold dividends and dividends on the shares of overseas listed companies through Shanghai-Hong Kong Stock Connect
According to the policy, H-share companies should apply to China Securities Depository and Clearing Corporation Limited (hereinafter referred to as "ChinaClear") for dividends and dividends obtained by mainland individual investors investing in H-shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect, and ChinaClear will provide the H-share companies with a register of mainland individual investors, and the H-share companies will withhold individual income tax at a rate of 20%.
Dividends and dividends received by Mainland individual investors investing in non-H shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect are subject to individual income tax withheld by ChinaClear at a rate of 20%.
If an individual investor has paid withholding tax abroad, he/she can apply for tax credit with the competent tax authority of ChinaClear with a valid tax deduction certificate.
Policy basis:
Article 1 of the "Cai Shui [2014] No. 81).
4. Stamp duty on the transfer of shares (tradable shares & restricted shares) of domestic listed companies by individuals
The tax liability of stamp duty shall be incurred on the day when the taxpayer submits the taxable certificate or completes the securities transaction;
The withholding obligation of stamp duty on securities transactions occurs on the day of completion of the securities transaction.
The stamp duty on securities transactions shall be paid on a weekly basis, and the withholding agent of the stamp duty on securities transactions shall declare the tax and the interest on bank settlement within five days from the date of the end of each week.
The securities depository and clearing institution (China Securities Depository and Clearing Corporation Limited, hereinafter referred to as "ChinaClear") is the withholding agent of stamp duty on securities transactions, and shall declare the tax payment and bank settlement interest to the competent tax authority where the institution is located.
To put it simply, when we sell stocks, the tax liability occurs, and the seller (including companies and individuals) is the taxpayer, but we don't need to calculate how much tax to pay, because ChinaClear is a withholding agent, it will directly deduct this part of the tax, and then declare the tax to the tax bureau within five days next week.
In addition, investors in the trading of individual stocks, but also have to charge commission fees, transfer fees, of which commission fees are charged when investors buy and sell stocks, generally speaking, the commission rate is three ten-thousandths, different securities companies are different, each less than five yuan, according to the standard of five yuan, transfer fees according to the standard of 1/100,000 of the turnover two-way charge.
Policy basis:
", effective as of July 1, 2022.
Fourth, the "new third board" listed (non-listed) enterprises stock transfer issues
1. Value-added tax on stocks on the "New Third Board".
(Guo Fa [2013] No. 49) mentions that "if tax policies are involved in market construction, in principle, they shall be treated in accordance with the tax policies of investors of listed companies";
However, in view of the fact that although the NEEQ enterprises are public enterprises, their shares do not have the characteristics of free transfer in the secondary market, and they are not listed companies in the real sense;
The NEEQ stocks do not have the characteristics of "financial products" that are freely transferred in the secondary market, but have more "equity" attributes, and the transfer of NEEQ stocks has not been included in the scope of VAT collection for the time being.
2. Individual income tax on the transfer of "New Third Board" stocks
(1) From November 1, 2018 (inclusive), the income obtained by individuals from the transfer of non-original shares of companies listed on the New Third Board shall be temporarily exempted from individual income tax.
(2) The income obtained by individuals from the transfer of the original shares of companies listed on the New Third Board shall be subject to individual income tax at a proportional rate of 20% according to the "income from property transfer".
3. Individual income tax on dividends and dividends of "New Third Board" stocks
Same as the secondary market policy
4. Stamp duty on stocks on the "New Third Board".
Stocks obtained from the NEEQ market are subject to stamp duty at a rate of 1/1000.
5. Policy basis:
(Cai Shui [2018] No. 137)
(CS [2014] No. 46)
(CS [2014] No. 47)
《》
(Cai Shui [2012] No. 85)
Author: AK@CapMarket Tax; Source: AK CapMarket TAX. The content of this article is for general information purposes only and is not intended as formal auditor, accounting, tax or other advice, and we cannot guarantee that such information will remain accurate in the future. No person should act on the basis of the information contained herein without having due regard to the relevant circumstances and obtaining appropriate professional advice. The articles reproduced in this issue are for academic exchange purposes only. The original copyright of the article or material belongs to the original author or original copyright owner, and we respect copyright protection. If you have any questions, please contact us, thank you!