According to the announcement of SAT on 7 July 2011, enterprise shall pay corporate income tax on taxable income arising from transferring restricted shares of listed companies. Regarding transferring of the restricted shares of listed companies the enterprise holds on behalf of individuals to the actual owners, if the balance after tax is concerned, the actual owner need not pay individual income tax.
Lee & Lee Associates Comments: The above announcement clarifies that corporate income tax, instead of individual income tax shall be levied on taxable income arising from transferring of restricted shares of listed companies. This rule facilitates the tax administration of tax authority and reduce overall tax burden of taxpayers.
Relevant Rule: Announcement of SAT on Issues Concerning the Income Tax on the Transfer of Restricted Shares of Listed Companies by Enterprises, No.39 2011
