Ministry of Finance, State Administration of Taxation and China Securities Regulatory Commission, Circular on Issues Relevant to the Implementation of a Policy of Graduated Individual Income Tax on Dividends and Bonuses from Listed Companies

Issued: November 16 2012
Effective: January 1 2013

Main contents: With respect to listed company stocks obtained on the public offering and transfer market, if the individual holds the shares for one month or less, the entire amount of the income derived from dividends and bonuses shall be counted as part of his/her taxable income; if he/she holds the shares for more than one month but less than or equal to one year, provisionally, a reduced percentage of 50% of the amount shall be counted as part of his/her taxable income; or if he/she holds the shares for more than one year, provisionally, a reduced percentage of 25% of the amount shall be counted as part of his/her taxable income. Individual income tax shall be levied at the rate of 20% on all of the foregoing income.

For the purposes of the preceding paragraph, the term “listed company” means a company listed and traded on the Shanghai Stock Exchange or the Shenzhen Stock Exchange. The term “hold(ing period)” means the period between the date on which an individual obtained listed company stock on the public offering and transfer market and the date immediately preceding the date on which he/she transferred and delivered the stock (Article 1).

Repealed legislation: Ministry of Finance and State Administration of Taxation, Circular on Policies Relevant to Individual Income Tax on Dividends and Bonuses, Jun 13 2005; and Ministry of Finance and State Administration of Taxation, Supplementary Circular on Relevant Individual Income Tax Policies on Dividends and Bonuses, Jun 24 2005

Issued: November 16 2012
Effective: January 1 2013

Main contents: With respect to listed company stocks obtained on the public offering and transfer market, if the individual holds the shares for one month or less, the entire amount of the income derived from dividends and bonuses shall be counted as part of his/her taxable income; if he/she holds the shares for more than one month but less than or equal to one year, provisionally, a reduced percentage of 50% of the amount shall be counted as part of his/her taxable income; or if he/she holds the shares for more than one year, provisionally, a reduced percentage of 25% of the amount shall be counted as part of his/her taxable income. Individual income tax shall be levied at the rate of 20% on all of the foregoing income.

For the purposes of the preceding paragraph, the term “listed company” means a company listed and traded on the Shanghai Stock Exchange or the Shenzhen Stock Exchange. The term “hold(ing period)” means the period between the date on which an individual obtained listed company stock on the public offering and transfer market and the date immediately preceding the date on which he/she transferred and delivered the stock (Article 1).

Repealed legislation: Ministry of Finance and State Administration of Taxation, Circular on Policies Relevant to Individual Income Tax on Dividends and Bonuses, Jun 13 2005; and Ministry of Finance and State Administration of Taxation, Supplementary Circular on Relevant Individual Income Tax Policies on Dividends and Bonuses, Jun 24 2005