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Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies Pertaining to Equity Incentives for Listed Companies

Category:

Policies and Regulations

Author:

Ministry of Finance

Source:

Tax Policy Department of the Ministry of Finance

Release date:

2024-04-30

Announcement on the Individual Income Tax Policies Related to Equity Incentives for Listed Companies

Announcement No. 2 of 2024 by the Ministry of Finance and the State Taxation Administration

To support enterprises in their innovative development, the following personal income tax policies regarding equity incentives for listed companies are hereby announced:
1. For stock options, restricted stocks, and equity awards granted by domestic listed companies to individuals, upon filing with the competent tax authority, the individual may pay the applicable personal income tax within a period not exceeding 36 months from the date of exercising the stock option, the lifting of restrictions on the restricted stock, or the receipt of the equity award (hereinafter referred to as “exercise”). If the taxpayer leaves employment during this period, all taxes must be paid in full prior to departure.
II. For the purposes of this announcement, “domestic listed company” refers to a joint-stock company whose shares are listed and traded on the Shanghai Stock Exchange, the Shenzhen Stock Exchange, or the Beijing Stock Exchange.
III. This Announcement shall be effective from January 1, 2024, to December 31, 2027. Taxpayers exercising their rights during this period may apply the provisions set forth herein. For taxpayers who exercised their rights after January 1, 2023, and have not yet paid all applicable taxes, the provisions of this Announcement shall apply; the installment payment period shall be calculated from the date of exercise.
IV. The securities regulatory authority and the tax authorities shall establish an information-sharing mechanism, sharing with the tax authorities, on a quarterly basis, relevant information on equity incentive plans of listed companies. The fiscal, tax, and securities regulatory authorities shall jointly ensure the effective implementation of the policy.
5. The following documents or provisions are hereby repealed simultaneously:
(1) Article 2, Paragraph (1) of the “Notice of the Ministry of Finance and the State Taxation Administration on Improving the Income Tax Policies Related to Equity Incentives and Technology Contributions” (Cai Shui [2016] No. 101).

(II) Notice of the Ministry of Finance and the State Taxation Administration on the Policy of Deferred Tax Payment for Equity Incentives in the Core Area (Haidian Park) of the Zhongguancun National Independent Innovation Demonstration Zone (Cai Shui [2022] No. 16).

 

This is hereby announced.

                                                                     

 

Ministry of Finance State Taxation Administration

April 17, 2024

 

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