Tax services

Worldwide tax summaries Asian Tax and Advisory Webcast Series

China Tax/Business News Flash 

View this page in: 简体中文版

By International Assignment Services

Sep 2016, Issue 26

China: new "super" tax incentives for qualified equity incentive plans and investments

In the efforts to support the "Mass Entrepreneurship and Innovation" strategy and to promote structural transformation of the Chinese economies, the Chinese Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly released the Notice on Enhancement of the Income Tax Policies for Equity Incentives and Equity Investment with Technology (Technology Investments) (Caishui [2016] No.101, hereinafter referred to as "Circular 101") on 22 September 2016.

The "super" tax incentives apply to qualified equity incentive plans of eligible non-listed companies. They not only defer the taxing point to the time of disposal of the shares acquired but also effectively reduce the maximum tax rate from 45% to 20%.

In addition, Circular 101 further enhances the current favourable tax treatment for qualified equity incentive plans of eligible listed companies by extending the tax payments over a period of up to 12 months (from previously six months) for domestic listed companies. Circular 101 also offers tax deferral treatments for technology investments for domestic companies.

Circular 101 received a warm welcome among entrepreneurs, venture capital and private equity markets. It is hailed as the most favourable income tax policy on equity incentive plans ever. Circular 101 has already taken effect from 1 September 2016.

Other issues of China Tax/Business News Flash
Visit our Tax Library.
Jacky Chu
Tel: +[86] (21) 2323 5509 Email
Edmund Yang
Tel: +[86] (10) 6533 2812 Email
Jane Cheung
Tel: +[86] (21) 2323 3031 Email
Louis Lam
Hong Kong
Tel: +[852] 2289 5528 Email
Rebecca Lai
Tel: +[86] (21) 2323 3065 Email
More contacts