The SAT issued its Announcement on Issues concerning Verification of Individual Income Tax Basis Calculation for Share Transfers (“Announcement”) on December 14, 2010. The Announcement will enter into effect 30 days after the date of issuance.

According to the Announcement, if a natural person obtains earnings by transferring shares, the amount of the earnings shall be calculated based on the transferred shares’ fair transaction value and the tax calculation basis shall be determined correspondingly.

Share transfers in which the Announcement may have be of concern include when the declared price of share transfer is lower than the initial investment, is lower than the consideration paid on the transferred shares plus relevant tax or when the declared price of equity transfer is lower than the corresponding net assets.

The Announcement does not apply to transfers of publicly traded shares.

  • Announcement on Issues concerning Verification of Individual Income Tax Basis Calculation for Share Transfers
  • Issuing Authority: the State Administration of Taxation
  • Date of Issuance: December 14, 2010 / Effective Date: January 14, 2011