Q：
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What does an individual's equity transfer refer to?
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A：
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According to the Announcement of the State Administration of Taxation on the Administration of Individual Income Tax on Equity Transfer Income (Trial) (Announcement No. 67 of the State Administration of Taxation in 2014), natural person shareholders invest in the equity or shares of enterprises or organizations established within China. Equity transfer refers to the act of an individual transferring their equity to another individual or legal entity.
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Q：
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What situations constitute a transfer of equity?
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A：
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This includes the following situations:
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Sale of equity;
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Repurchase of equity by the company;
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When the issuer issues new shares for the first time, the shareholders of the invested enterprise sell their shares to investors in a public offering;
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The equity is forcibly transferred by judicial or administrative authorities;
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Investing or engaging in other non-monetary transactions through equity;
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Offsetting debts with equity;
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Other equity transfer activities.
In the above circumstances, the equity has already undergone a substantial transfer, and the transferor has also received compensation or been exempted from liability accordingly. Therefore, all of them should be considered as equity transfer activity, and personal income tax should be paid according to regulations for personal income obtained.
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Q：
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Who are the taxpayers of personal income tax in the tax related business of individual equity transfer? Who is the withholding agent?
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A：
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The personal income tax on the income from individual equity transfer shall be paid by the equity transferor as the taxpayer and the transferee as the withholding agent. The transferee, whether a company or an individual, shall conscientiously fulfill the obligation to withhold taxes in accordance with the provisions of the Personal Income Tax Law.
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Q：
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What obligations do taxpayers, withholding agents, and invested enterprises need to fulfill in the process of personal equity transfer?
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A：
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Prior reporting obligation: The withholding agent shall report the relevant situation of the equity transfer to the competent tax authority within 5 working days after the signing of the equity transfer agreement. The invested enterprise shall, within 5 working days after the end of the board of directors or shareholders' meeting, submit to the competent tax authority the resolutions and minutes of the board of directors or shareholders' meeting related to equity changes.
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Tax declaration obligation: After the equity transfer occurs, taxpayers and withholding agents shall declare and pay taxes to the competent tax authority within 15 days of the following month.
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Post reporting obligation: If there is a change in the equity held by individual shareholders or shareholders in the invested enterprise, the individual income tax basic information form (Form A) containing information on shareholder changes and an explanation of shareholder changes shall be submitted to the competent tax authority within 15 days of the following month.
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Q：
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How to confirm the tax location for equity transfer?
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A：
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The personal income tax on the income from the transfer of individual equity shall be subject to the tax authority in the place where the invested enterprise is located as the competent tax authority.
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