在个人股东转让其所持公司股权时，税务事项是常见影响交易进程和交易成本的问题，现就有关问题汇总如下，供中外籍个人股东参考。
Tax considerations are a common factor influencing the process and cost of transferring company shares held by individual shareholders. This article provides a summary of relevant tax issues for the reference of both Chinese and foreign individual shareholders.
1. Who is the taxpayer and withholding agent in a personal equity transfer?
The taxpayer for personal income tax on personal equity transfer is the transferor of the equity, while the transferee is the withholding agent. Whether the transferee is an enterprise or an individual, they should fulfill their withholding tax obligations in accordance with the Personal Income Tax Law.
2. Where should I pay the tax after transferring my equity?
The tax authority of the location of the invested enterprise is the competent tax authority for personal income tax on personal equity transfer. The taxpayer of equity transfer income should file a tax return at the tax authority of the location of the invested enterprise.
3. Under what circumstances can the competent tax authority determine the equity transfer income?
According to Article 11 of the "Announcement on the Promulgation of the Provisional Measures for the Administration of Personal Income Tax on Equity Transfer Income" (State Taxation Administration Announcement No. 67 of 2014), the competent tax authority may determine the equity transfer income if any of the following circumstances occur: (1) The declared equity transfer income is significantly lower and there is no reasonable explanation; (2) Failure to file a tax return within the prescribed time limit and failure to file a return within the time limit after being ordered to do so by the tax authority; (3) The transferor is unable to provide or refuses to provide relevant information on the equity transfer income; (4) Other circumstances where the equity transfer income should be determined.
4. Is personal income tax levied on liquidated damages obtained during a personal equity transfer?
The liquidated damages obtained by the individual transferor due to the transferee's failure to pay the price within the prescribed period, after the successful transfer of equity, belong to the income generated from the transfer of property. The individual transferor's liquidated damages should be included in the income from the transfer of property and calculated and paid as personal income tax under the category of "income from the transfer of property." The tax shall be self-assessed and paid by the individual transferor to the competent tax authority. Income obtained by individuals from terminating investment, joint venture, or cooperative operation due to various reasons, such as equity transfer income, liquidated damages, compensation, and compensation recovered from the invested enterprise or cooperative project, other investors of the invested enterprise, or operating partners of the cooperative project, all belong to taxable income under the Personal Income Tax Law and shall be calculated and paid as personal income tax according to the provisions applicable to the category of "income from the transfer of property".
5. What materials should taxpayers and withholding agents submit when filing personal equity transfer tax (withholding) returns with the competent tax authority?
According to Article 21 of the "Announcement on the Promulgation of the Provisional Measures for the Administration of Personal Income Tax on Equity Transfer Income" (State Taxation Administration Announcement No. 67 of 2014), when taxpayers and withholding agents file personal equity transfer tax (withholding) returns with the competent tax authority, they shall also submit the following materials: (1) Equity transfer contract (agreement); (2) Identity certificates of both parties to the equity transfer; (3) For equity transfer that requires asset valuation in accordance with regulations, a net asset or land and property valuation report issued by a legally qualified intermediary institution shall be provided; (4) Proof that the tax basis is significantly lower but with a reasonable explanation; (5) Other materials required by the competent tax authority.
