China’s financial regulators have announced that transfers of “non-original shares” on Shenzhen’s New Third Board will be made temporally exempt from personal income tax.
The Ministry of Finance, the State Administration of Taxation and the China Securities Regulatory Commission recently issued the “Notice Concerning Personal Income Tax Policy in Relation to the Personal Transfer of Shares in Companies Listed on the Small and Medium-sized Enterprise Share Transfer System” (关于个人转让全国中小企业股份转让系统挂牌公司股票有关个人所得税政策的通知), for the purpose of “expediting the long-term stable development” of the share transfer system more commonly referred to as the “New Third Board” (新三板).
Starting from 1 November 2018 income obtained from the personal transfer of non-original shares of New Third Board companies shall be temporarily exempt from personal income tax, according to a report from the Chinese central bank’s news outlet.
“Non-original shares” as referred to in the Notice means shares in a company obtained by individuals following the listing of such companies on the New Third Board.
The Notice also stipulates that a 20% personal income tax shall be levied upon income obtained from the transfer of original shares in New Third Board companies, with original shares defined as those obtained by individuals prior to the listing such companies on the New Third Board.
