There are three main taxes involved in the equity transfer of foreign-invested enterprises, namely enterprise income tax, business tax and stamp duty.

1. Enterprise income tax: According to the provisions of the income tax law for foreign-invested enterprises and foreign enterprises, foreign investors of foreign-invested enterprises pay foreign enterprise income tax on the income from equity transfer, and the tax rate is 20% of the income.

2. Change business tax to value-added tax: If an investor invests in shares with intangible assets including trademarks, patents, proprietary technology, copyrights, trademarks, etc., or invests in shares with land use rights, he shall pay business tax at 5% of the transfer price when transferring shares. If the transfer price is obviously low without justifiable reasons, China tax authorities have the right to verify the transfer price as the tax basis for business tax.

3. Stamp duty: it is mainly levied on documents such as contracts, with the tax rate of 0.5‰, and the tax is based on the actual value of equity transfer price or equity.

Legal objectivity:

Company Law of the People's Republic of China

Article 71

Shareholders of a limited liability company may transfer all or part of their shares to each other.

Shareholders' transfer of equity to persons other than shareholders shall be approved by more than half of other shareholders. Shareholders shall notify other shareholders in writing to agree to the transfer of their shares. If other shareholders fail to reply within 30 days from the date of receiving the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred equity;

Do not buy, as agreed to transfer.

Under the same conditions, other shareholders have the priority to purchase the equity transferred with the consent of shareholders. If two or more shareholders claim to exercise the preemptive right, their respective purchase proportions shall be determined through consultation;

If negotiation fails, the preemptive right shall be exercised in accordance with their respective investment proportions at the time of transfer.

Where there are other provisions on equity transfer in the articles of association, such provisions shall prevail.