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Q：
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Our company received investment dividends this year. Do we need to pay corporate income tax?
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A：
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Income from equity investments obtained by a resident enterprise through direct investment in other resident enterprises shall be tax-exempt, excluding investment income derived from publicly traded shares issued by resident listed enterprises for which your company has been holding less than 12 consecutive months.
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Q：
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When shall an enterprise calculate corporate income tax on investment dividends received?
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A：
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For investment income such as dividends obtained by an enterprise, unless otherwise stipulated by the finance and taxation authorities of the State Council, income shall be recognized on the date when the investee signs the profit distribution resolution.
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Q：
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When should our company file corporate income tax returns for transferring equity interests in unlisted companies?
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A：
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Income from equity transfer shall be recognized when the transfer agreement takes effect and the equity alteration formalities are completed. The corresponding equity transfer income and costs shall be declared in the provisional corporate income tax filing for the period in which the equity income was recognized and the annual final settlement filing of the same year to calculate the income derived from equity transfer.
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Q：
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What tax rate applies to corporate income tax on income from equity transfer?
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A：
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Income from equity transfer shall be incorporated into the company's total profit of the current year for the calculation of corporate income tax, with a general applicable tax rate of 25%.
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Q：
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Are the funds recovered by an enterprise upon disinvestment from the investee enterprise subject to tax?
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A：
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Funds obtained by an enterprise through disinvestment from the investee shall be divided into three components for tax treatment: the portion equivalent to the initial capital contribution constitutes recovery of investment and is non-taxable; the portion calculated based on the proportion of reduced paid-in capital and corresponding to the investee’s accumulated undistributed profits and surplus reserve is dividend income, which is also tax-exempt between qualified resident enterprises; the remaining portion is income from transfer of investment assets and shall be subject to corporate income tax.
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