Q：
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Can individual partner working for partnership declare and pay individual income tax on salary?
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A：
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No. According to Article 4 of the Regulations on Collection of Individual Income Tax with Investors of Sole Proprietorships and Partnership, the balance of a sole proprietorships and partnership by deducting costs, expenses and losses from annual revenue shall be recognized as production and operation income of the investors, instead of the income from salaries and wages.
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Q：
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How to pay individual income tax for interests and dividends earned by partnerships through outbound investment?
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A：
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Pursuant to the notice on implementation of Regulations on Collection of Individual Income Tax with Investors of Sole Proprietorships and Partnership released by the State Taxation Administration, the interests or dividends earned from outbound investment by sole proprietorships and partnership shall not be incorporated into income of the sole proprietorships and partnership, but recognized as income of interest or dividend of the investors and pay individual income tax.
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Q：
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Does the individual partner need to pay individual income tax when transferring property shares of the partnership?
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A：
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Yes, in accordance with the Regulations on the Implementation of the Individual Income Tax Law of P. R. China, the income from property transfer refers to the assignments of valued securities, stocks, property shares in partnerships, real assets, machinery and equipment, vehicles, vessels and other assets. Therefore, individual income tax shall be levied on individual partners for the transfer of property shares of partnerships.
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Q：
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What tax preferential policies can be enjoyed by individual partners if a venture capital partnership invests in a start-up technology company for two years?
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A：
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Individual partner may deduct 70% of the investment in the start-up technology company from his operating income earned from the venture capital partnership. In case the operating income is insufficient in current year, deduction may be carried forward into following tax years.
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Q：
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Does the investor pay individual income tax for liquidation income?
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A：
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Yes, the liquidation income shall be recognized as annual operation income and pay individual income tax accordingly.
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