The taxes involved in equity transfer mainly include:

I. Value-added tax

Equity transfer of unlisted enterprises does not fall within the scope of value-added tax and is not subject to value-added tax.

For the transfer of shares (stocks) of listed companies, individuals (including individual industrial and commercial households and other individuals, the same below) are exempt from value-added tax for buying and selling shares (stocks) of listed companies; Qualified foreign investors (QFII) entrust domestic companies to engage in securities trading business in China without VAT; Investors in Hong Kong market (including units and individuals) are exempt from value-added tax when buying and selling A shares listed on Shanghai Stock Exchange through Shanghai-Hong Kong Stock Connect; Exemption from value-added tax for Hong Kong market investors (including units and individuals) to buy and sell mainland fund shares through mutual recognition of funds; Securities investment funds (closed-end securities investment funds, open-end securities investment funds) managers use funds to buy and sell stocks and bonds without VAT.

Except for the above-mentioned units exempted from value-added tax, when buying and selling shares (stocks) of listed companies, they all need to pay value-added tax according to "financial commodity transfer", regardless of the transfer mode (whether through secondary market transfer or equity agreement transfer). As the New Third Board is a non-listed public company, the relevant departments are studying this issue and will not deal with it at present.

Ii. enterprise income tax

According to Article 3 of the Notice of State Taxation Administration of The People's Republic of China on Several Tax Issues Concerning the Implementation of the Enterprise Income Tax Law (Guo Shui Han [20/KLOC-0] No.79), the income from equity transfer shall be recognized when the transfer agreement comes into effect and the equity change procedures are completed. After deducting the costs incurred in obtaining the equity, the income from equity transfer shall be the income from equity transfer.

According to Article 5 of the Notice of the Ministry of Finance and State Taxation Administration of The People's Republic of China on Several Issues Concerning the Treatment of Enterprise Income Tax in Enterprise Liquidation Business (Caishui [2009] No.60), the amount of the remaining assets distributed by the shareholders of the liquidated enterprise, which is equivalent to the part of the accumulated undistributed profits and accumulated surplus reserve of the liquidated enterprise calculated according to the proportion of the shares held by the shareholders, shall be recognized as dividend income; The balance of the remaining assets after deducting dividends, which exceeds or is lower than the investment cost of shareholders, shall be recognized as the income or loss of shareholders' investment transfer.

According to Article 5 "Tax Treatment of Withdrawal or Reduction of Investment by Investment Enterprises" of Announcement of State Taxation Administration of The People's Republic of China on Several Issues Concerning Enterprise Income Tax (State Taxation Administration of The People's Republic of China Announcement No.201/No.34), if an investment enterprise withdraws or reduces its investment from the invested enterprise, the part equivalent to the initial investment shall be recognized as investment recovery; The part equivalent to the accumulated undistributed profits and accumulated surplus reserves of the invested enterprise calculated by reducing the proportion of paid-in capital shall be recognized as dividend income; The rest is recognized as income from the transfer of investment assets. As investment income, the income from the transfer of enterprise equity should be included in the taxable income of the enterprise and paid enterprise income tax.

Personal income tax treatment involved in equity transfer

According to Articles 1, 2 and 3 of the Notice on Individual Income Tax Policies for Individual Transfer of Stocks of Listed Companies in the National Small and Medium-sized Enterprises Share Transfer System (Caishui [20 18] 1 37), "From 20181month, "Personal income tax shall be levied at the proportional rate of 20% on the income obtained by individuals from transferring the original shares of companies listed on the New Third Board."; "Before September 20 19, the individual income tax on the original shares of companies listed on the New Third Board was transferred by individuals, and the collection and management measures were implemented in accordance with the relevant provisions of the current equity transfer income. The transferee of the shares was the withholding agent, and the tax authorities at the place where the invested enterprise was located were responsible for the collection and management. From September 20 1 9, inclusive, Individual income tax on the transfer of the original shares of a company listed on the New Third Board by an individual shall be withheld by the securities institution entrusted with the shares. The local competent tax authorities where the securities institutions with stock custody are located are responsible for the collection and management. For the specific collection and management measures, please refer to the Notice of State Taxation Administration of The People's Republic of China Securities Regulatory Commission of the Ministry of Finance on Relevant Issues Concerning the Collection of Individual Income Tax from Personal Transfer of Restricted Shares of Listed Companies (Caishui [2009]167) and the Supplementary Notice of State Taxation Administration of The People's Republic of China Securities Regulatory Commission of the Ministry of Finance on Relevant Issues Concerning the Collection of Individual Income Tax from Personal Transfer of Restricted Shares of Listed Companies (Caishui [20/KLOC-0]).

According to Article 4 of Chapter 1 of the Measures for the Administration of Individual Income Tax from Equity Transfer (for Trial Implementation) in the Announcement of State Taxation Administration of The People's Republic of China on Issuing the Measures for the Administration of Individual Income Tax from Equity Transfer (State Taxation Administration of The People's Republic of China Announcement No.67 of 20 14), if an individual transfers equity, the balance of the equity transfer income after deducting the original value of the equity and reasonable expenses shall be the taxable income, and the "property transfer income" shall be 20%.

Income from equity transfer of individual industrial and commercial households, partnership enterprises and sole proprietorship enterprises belongs to property transfer income, which should be included in the total income of individual industrial and commercial households, partnership enterprises and sole proprietorship enterprises, and the related equity costs can be deducted according to regulations. For the income from equity transfer, investors (partners) should pay personal income tax according to the taxable items of "operating income", with the five-level excessive progressive tax rate of 5%~35%.