1.       IIT is required to be paid in advance for individual's equity transfer

According to Individual’s Income Tax Law,  Industrial and Commercial Bureau shall verify the duty-paid certificate in change registration for individual’s equity transfer. Therefore, the tax payment certificate shall be obtained before the transfer of individual’s equity.

2.      Taxes for individual's equity transfer

(1)	Stamp duty. The individual’s equity transfer shall be subject to tax rate of 0.05% based on provisions on transfer of property rights.
(2)	Individual’s Income Tax. The income of individual's equity transfer belongs to taxable income of property transfer, which shall be subject to tax rate of 20%.
(3)	Land Value Increment Tax is also levied under special circumstances.  If enterprises hold by individuals only have real estate such as housing and land, tax bureau man ask individuasl to pay Land Value Increment Tax in the case of one-time transfer.

3.      Taxpayer and withholding agent

The transferor of individual’s equity shall be the tax payer and the transferee shall be the withholding agent. The withholding agent has the statutory obligation to withhold and pay income tax for the equity transfer. If the withholding agent failes to fullfill the obligation, the tax authorities shall recover the tax from the taxpayer and impose on the withholding agent a fine of more than 50% but less than 3 times of the IIT payable.

4.       Assets need to be evaluated in individual's equity transfer

The assets that shall be evaluated by asset evaluation agent include land use rights, houses, unsold houses of real estate enterprise, intellectual property rights, exploration rights, mining rights, equity, etc.

5.       Ressonable ground for equity transfer with no payment or no profit

(1)	There are valid documents to prove that the invested enterprise was affected greatly by the adjustment of national policies, resulting in the equity transfer at a low price.
(2)	Inherit or transfer the equity to the individual’s spouse, parents, children, grandparent, grandchild, brother or sister who can provide legal proof of relationship, as well as to one’s fosters or dependents who assume direct custody or support obligations to the transferor;
(3)	The internal transfer of non-transferable equity held by the employees of the enterprise as stipulated by relevant laws, government documents or articles of association of enterprise, which also adequately proved by relevant documents that the transfer price is reasonable and true.
(4)	Other reasonable circumstances in which both parties can provide effective evidence to prove the rationality.

6.      Time of tax obligation

According to Management Measures on IIT of Equity Transfer Income(Trial), the withholding agent and taxpayer shall proceed tax declaration within 15 days in the next month under any of the following circumstances:

(1)	The transferee has fully or partially paid the equity transfer price;
(2)	The euity transfer agreement has been signed and entered into force;
(3)	The transferee has actually performed the duties of shareholders or enjoyed shareholder’s rights;
(4)	The judgement, registration or announcement of relevant government departments becomes effective;
(5)	The following things have been completed: equity is forced to transfer by judicial or administrative authorities, make foreign investment or other non-monetary transactions with equity, use equity to pay off debts;
(6)	Other situations as determined by the tax authorities that there is evidence to prove the equity has been transferred.

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