Generally speaking, the income tax payment of equity transfer can be divided into two categories, one is the income tax payment involved in equity transfer held by enterprises, and the other is the income tax payment involved in equity transfer held by individuals.

According to the provisions of the Enterprise Income Tax Law, an enterprise shall, within 15 days after the end of the month or quarter, submit a tax return for prepaying enterprise income tax to the tax authorities to pay taxes in advance. The enterprise shall, within five months after the end of the year, submit the annual enterprise income tax return to the tax authorities for final settlement and settlement of the tax refund. Therefore, enterprises should pay taxes in advance after receiving the equity transfer payment, and carry out liquidation and remittance at the end of the year.

The income tax involved in the transfer of shares held by individuals is mainly based on the provisions of the Measures for the Administration of Individual Income Tax on Equity Transfer (Trial) issued by State Taxation Administration of The People's Republic of China. Specifically:

Chapter II Confirmation of Income from Equity Transfer

Article 7

Income from equity transfer refers to cash, objects, securities and other forms of economic benefits obtained by the transferor due to equity transfer.

Article 8

All kinds of money related to equity transfer obtained by the transferor, including liquidated damages, compensation and other currencies, assets and rights and interests in various names, shall be incorporated into equity transfer income.

Article 9

According to the contract, the taxpayer's subsequent income after meeting the agreed conditions shall be regarded as the income from equity transfer.

Article 10

Income from equity transfer shall be determined in accordance with the principle of fair trade.

Article 11

Under any of the following circumstances, the competent tax authorities may verify the income from equity transfer:

(1) The declared income from equity transfer is obviously low without justifiable reasons;

(2) Failing to file tax returns within the prescribed time limit, or failing to file tax returns within the time limit ordered by the tax authorities;

(3) The transferor is unable to provide or refuses to provide relevant information on the income from equity transfer;

(4) Other circumstances in which the income from equity transfer should be verified.

Article 12

In any of the following circumstances, it is deemed that the income from equity transfer is obviously low:

(1) The declared equity transfer income is lower than the share of net assets corresponding to the equity. Among them, the invested enterprise owns land use rights, houses, unsold real estate, intellectual property rights, exploration rights, mining rights, equity and other assets, and the declared equity transfer income is lower than the fair value share of the net assets corresponding to the equity;

(2) The declared income from equity transfer is lower than the initial investment cost or the price paid for acquiring equity and related taxes;

(3) The declared income of equity transfer is lower than that of the same shareholder or other shareholders of the same enterprise under the same or similar conditions;

(4) The declared equity transfer income is lower than that of enterprises in the same industry under the same or similar conditions;

(five) unreasonable free transfer of equity or shares;

(six) other circumstances identified by the competent tax authorities.

Article 13

The income from equity transfer that meets one of the following conditions is obviously low, which is considered reasonable:

(1) can produce valid documents to prove that the production and operation of the invested enterprise have been greatly affected by the adjustment of national policies, resulting in the low-cost transfer of equity;

(2) Inherit or transfer the equity to the spouse, parents, children, grandparents, grandchildren, grandchildren, brothers and sisters who can provide legal and valid identity certificates, and the dependents or supporters who have direct support or support obligations to the transferor;

(3) Internal transfer of non-transferable shares held by employees of the enterprise as stipulated in relevant laws, government documents or articles of association, and there are relevant materials that fully prove that the transfer price is reasonable and true;

(4) Other reasonable circumstances in which both parties to the equity transfer can provide effective evidence to prove its rationality.

Article 14

The competent tax authorities shall, in turn, verify the income from equity transfer according to the following methods:

(1) net assets verification method

The income from equity transfer shall be verified according to the net assets per share or the share of net assets corresponding to equity.

If the land use rights, houses, unsold real estate, intellectual property rights, exploration rights, mining rights, equity and other assets of the invested enterprise account for more than 20% of the total assets of the enterprise, the competent tax authorities may refer to the asset appraisal report issued by the legally qualified intermediary agency provided by the taxpayer to verify the income from equity transfer.

If the equity transfer occurs again within 6 months and the net assets of the invested enterprise have not changed significantly, the competent tax authorities may refer to the asset evaluation report of the invested enterprise at the time of the last equity transfer to verify the equity transfer income.

(2) analogy method

1. Approved with reference to the income from equity transfer of the same shareholder or other shareholders of the same enterprise under the same or similar conditions;

2. With reference to the same or similar conditions, verify the income from equity transfer of enterprises in the same industry.

(3) Other reasonable methods.

If it is difficult for the competent tax authorities to use the above methods to verify the income from equity transfer, they can use other reasonable methods to verify it.

Chapter III Confirmation of Original Value of Equity

Article 15 The original value of individual equity transfer shall be confirmed by the following methods:

(1) The original value of the equity acquired by cash contribution shall be confirmed according to the sum of the actual price paid and the reasonable taxes and fees directly related to the acquisition of equity;

(2) The original value of the equity acquired by investing in non-monetary assets shall be confirmed according to the sum of the reasonable taxes and fees directly related to the price of non-monetary assets and the acquisition of equity when the investment is approved or approved by the tax authorities;

(3) If the equity is acquired through free transfer and meets the circumstances listed in Item (2) of Article 13 of these Measures, the original value of the equity shall be confirmed according to the sum of the reasonable tax incurred in acquiring the equity and the original value of the original holder's equity;

(4) If the invested enterprise converts capital reserve, surplus reserve and undistributed profit into share capital, and individual shareholders have paid personal income tax according to law, the original equity value of the newly converted share capital shall be confirmed by the sum of the increased amount and relevant taxes and fees;

(5) In addition to the above circumstances, the original value of the equity shall be reasonably confirmed by the competent tax authorities in accordance with the principle of avoiding double collection of individual income tax.

Article 16

If the transferor of the equity is approved by the competent tax authorities and individual income tax is levied according to law, the original value of the equity of the transferee of the equity shall be confirmed by the sum of the reasonable taxes and fees incurred when acquiring the equity and the equity transfer income approved by the competent tax authorities.

Article 17

If an individual fails to provide complete and accurate proof of the original value of the equity when transferring the equity, and the original value of the equity cannot be calculated correctly, the original value of the equity shall be verified by the competent tax authorities.

Article 18

If an individual has acquired the equity of the same invested enterprise for many times, when transferring part of the equity, the original value of the equity shall be determined by the "weighted average method".

Time of tax declaration:

Article 20

Under any of the following circumstances, withholding agents and taxpayers shall report and pay taxes to the competent tax authorities according to law within 05 days of the following month:

(1) The transferee has paid or partially paid the equity transfer price;

(2) The equity transfer agreement has been signed and entered into force;

(3) The transferee has actually performed the shareholders' duties or enjoyed the shareholders' rights and interests;

(four) the judgment, registration or announcement of the relevant state departments shall take effect;

(five) the fourth to seventh acts of article third of these measures have been completed;

(6) Other circumstances identified by the tax authorities where there is evidence to prove that the equity has been transferred.