|
Welcome Guest
|
|
You are using Guest Account
|
|
||||||||||||||||||||||||||||||||||
|
As to the issue regarding the individual incomes taxes levied on incomes generated from stocks options, it has been provided for in the Circular of the Ministry of Finance and the State Administration of Taxation on the Levy of Individual Income Taxes on Incomes Generated from Stock Options (No. 35 [2005] of the Ministry of Finance). We hereby make a supplementary notice on the implementation thereof as follows: I. Where an employee accepts any stock options from his employer (including a listed company or non-listed company) and if the stocks involved are issued by a listed company (at home or abroad), the relevant taxation shall be handled according to Document No. 35 [2005] of the Ministry of Finance. II. The term "net incomes generated from the transfer of stock options" described in item (2), Article 2 of Document No. 35 [2005] of the Ministry of Finance generally refers to the incomes generated from the transfer of stock options. Where any employee purchases any stock options at a discount, the balance reached after deduction of the actual payment of the discounted stock options from the incomes generated from the transfer of stock options shall be deemed as the net income generated from the transfer of stock options. III. The term "granting price per share paid by an employee to obtain the stock options" prescribed in item (2), Article 2 of Document No. 35 [2005] of the Ministry of Finance generally refers to the price per share actually paid by the employee by exercising his stock options. If any employee obtains his stock options at a discount, the aforesaid granting price may include the price actually paid by the employee when he purchased the stock options at a discount. IV. Where any employee who holds stock options fails to actually trade his stocks on the vesting date yet directly obtains any proceeds from the authorizing enterprise at the margin between the market price of the designated stocks of the stock options on the vesting date and the granting price, the proceeds generated from the price margin shall be deemed as the employee's salary incomes in the form of stock options and the corresponding individual income tax shall be calculated and levied according to the relevant provisions of Document No. 35 [2005] of the Ministry of Finance. V. In the process of determining the sources of incomes of an employee obtained from stock options, the number of work months at home and abroad shall be classified according to the provisions of Document No. 35 [2005] of the Ministry of Finance. The total number of work months at home and abroad refers to the total of months when an employee shall perform his work obligations before the vesting date according to the provisions of relevant plan of enterprise stock options. VI. Some stock options can be stipulated upon authorization as transferable, and for which there is relevant public market and listed price at home and abroad (hereinafter referred to the publicly traded stock options). Where an employee accepts any publicly traded stock options, the relevant tax levy shall be handled under the circumstance separately prescribed in item (1), Article 2 of Document No. 35 [2005] of the Ministry of Finance in the following ways: (1) Where an employee obtains any publicly traded stock options, such options shall be the assets of value that an employee has actually obtained, and they shall be taken as his salary income in light of the market price of stock options at the date of grant for the month where the date of grant falls within, and the relevant individual income tax shall be calculated and levied according to item (1), Article 4 of Document No. 35 [2005] of the Ministry of Finance. If an employee obtains any stock options at a discount, the balance after deduction of the actual payment for the stock options from the market price of the stock options at the date of grant shall be taken as his salary income for the month where the date of grant falls within. (2) Where an employee obtains the publicly traded stock options mentioned above, the income generated from the transfer of stock options shall be taken as the income of property transfer and the relevant taxation shall be handled according to item (2), Article 4 of Document No. 35 [2005] of the Ministry of Finance. (3) Where an employee has obtained the publicly traded stock options mentioned in item (1) of this Article, his individual income tax may not be re-calculated when any stock is purchased by exercising the stock options. VII. Where an employee obtains salaries in the form of stock options in a Gregorian month, it shall be counted as one salary. Where an employee obtains his salaries in the form of stock options for several times in a tax year, the taxable amount shall be calculated in light of the first salary paid in the form of stock options within the tax year according to the formula provided in Item (1), Article 4 of Document No. 35 [2005] of the Ministry of Finance, While the taxable amount for the subsequent salaries paid in the form of stock options within the tax year shall be calculated according to the following formula: Taxable amount = (Accumulated taxable amount for the salaries paid in the form of stock options within the tax year / Prescribed number of months x Applicable tax rate - Quick calculation deduction) x Prescribed number of months - Already paid accumulated taxes for the salaries paid in the form of stock options within the tax year The term "accumulated taxable amount for the salaries paid in the form of stock options within the tax year" in the aforesaid formula includes the accumulated taxable amount for the present salary and all the previous salaries paid in the form of stock options that have been obtained within the tax year. The term "prescribed number of months" in the aforesaid formula refers to the number of months of work period during when an employee obtains his salaries in the form of stock options within the territory of China. Where the said period exceeds 12 months, it shall be calculated as 12 months. The term "applicable tax rate and quick calculation deduction" mentioned in the aforesaid formula shall be determined by the corresponding quotient as a result of dividing the accumulated taxable amount of the salaries in the form of stock options within the tax year by the prescribed number of months to the table of tax rates attached to the Circular of the State Administration of Taxation on Printing and Distributing the Provisions on Collecting Individual Income Taxes (No. 089 [1994]). The term "already paid accumulated taxes for the salaries paid in the form of stock options within the tax year" in the aforesaid formula does not include the taxable amount for the present salary paid in the form of stock options. VIII. Where an employee has obtained for several times or several salary incomes at one time paid in the form of stock options within the territory of China and if the numbers of months of work period for the salary incomes of the different times or the different salary incomes obtained at one time and paid in the form of stock options are different, the weighted average number of months during the work period within the territory of China shall be the number of months applied in the formula prescribed in Item (1), Article 4 of Document No. 35 [2005] of the Ministry of Finance as well as that prescribed in the formula of Article 7 of the present Circular, but it shall not be any more than 12 months at maximum. The formula for calculation is as follows: Prescribed number of months = ¡ÆProduct of the taxable amount for all the salary incomes in the form of stock options with the corresponding number of months of work period within the territory of China/¡ÆTaxable amount of the salary incomes of the different times or the salary incomes obtained at one time and paid in the form of stock options |
||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
|
Copyright 2002 NovexCn.com
|