04 November 2016 China enhances preferential income tax policies to encourage entrepreneurship and innovation Recently, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly released Circular 101, which provides preferential Individual Income Tax (IIT) treatment for stock incentive plans and investments with technologies as capital contribution (Technology Contribution). Under the preferential treatment, qualifying equity income of employees of unlisted companies will be subject to IIT at a flat tax rate of 20% while in the past such income was subject to IIT at rates of up to 45%, providing welcome tax relief for employees of unlisted companies. Circular 101 is effective from September 1, 2016. A Tax Alert prepared by EY's People Advisory Services group, and attached below, provides additional details. Document ID: 2016-1872 |
