The formula is: tax payable = (taxable income of wages and salaries in the form of stock options ÷ specified months × applicable tax rate-quick deduction) × specified months.
The number of months specified in the formula in the preceding paragraph refers to the number of months that employees work in China in the form of stock options. If it exceeds 12 months, it shall be calculated as 12 months. The applicable tax rate and quick deduction in the formula in the preceding paragraph shall be determined according to the tax rate table attached to Guo Shui Fa [1994] No.89, and the taxable income of wages and salaries in the form of stock options shall be divided by the specified number of months.
2. If an individual obtains income from stock options, stock appreciation rights and restricted stocks more than twice (including twice) in a tax year, including income from the same equity incentive form or income from different equity incentives at the same time, the listed company shall combine the income from various equity incentives in the tax year and calculate and withhold individual income tax according to the formulas listed in Articles 7 and 8 of Guoshuihan No.902 [2006].
Legal basis: People's Republic of China (PRC) Tax Collection and Management Law.
Article 1 This Law is formulated with a view to strengthening the administration of tax collection, standardizing tax collection, safeguarding national tax revenue, protecting the legitimate rights and interests of taxpayers and promoting economic and social development.
Article 2 This Law is applicable to the collection and management of various taxes collected by tax authorities according to law.
Article 3 The collection, suspension, reduction, exemption, refund and supplementary payment of taxes shall be carried out in accordance with the law. Where the State Council is authorized by law, it shall be implemented in accordance with the administrative regulations formulated by the State Council.
No organ, unit or individual may, in violation of the provisions of laws and administrative regulations, arbitrarily make decisions on tax collection, suspension, tax reduction, exemption, tax refund, overdue tax and other decisions inconsistent with tax laws and administrative regulations.
Article 4 Units and individuals that are obligated to pay taxes according to laws and administrative regulations are taxpayers.
Units and individuals that have the obligation to withhold and pay taxes according to laws and administrative regulations are withholding agents. Taxpayers and withholding agents must pay taxes, withhold and remit taxes and collect and remit taxes in accordance with the provisions of laws and administrative regulations.