China's Ministry of Finance (MOF) said Tuesday nine types of individual transfer of listed companies' restricted shares will be subject to income tax.
The announcement came in the Supplementary Circular of Income Taxation Concerning Issues on Individual Transfers of Limited Shares of Listed Companies jointly released by the MOF, the State Administration of Taxation (SAT) and the China Securities Regulatory Commission (CSRC).
According to a similar circular issued at the end of 2009 by the same three government organs, from Jan. 1, 2010, 20 percent of personal earnings obtained from restricted shares transactions are paid in tax.
The supplementary circular aims to further tighten controls and strengthen the country's taxation administration.
It makes explicit that individual transfers of restricted shares or transactions that are essentially the same in nature must pay tax on the obtained cash, material objects and other forms of economic benefits.
It said owners of restricted shares that have changed hands several times before a restriction lift shall pay tax for each transfer of earnings.