A: According to the relevant laws and regulations of China, the income tax on foreign equity transfer of foreign-invested enterprises (hereinafter referred to as "foreign equity transfer") belongs to withholding income tax in nature. Before the implementation of the new income tax law, the transfer of foreign equity in China shall be subject to withholding income tax at the rate of 10%.

The Income Tax Law of People's Republic of China (PRC) on Enterprises with Foreign Investment and Foreign Enterprises (hereinafter referred to as the Income Tax Law on Foreign Investment) indirectly stipulates: "If a foreign enterprise does not set up an institution or place in China and obtains profits, interests, rents, royalties and other income from China, or if it sets up an institution or place, the above income has no actual connection with its institution or place.

The Notice of the Ministry of Finance in State Taxation Administration of The People's Republic of China on Several Policies and Business Issues Concerning Income Tax Collection of Foreign-invested Enterprises issued by the Ministry of Finance 1987[ 1987]033 clearly stipulates the income tax on foreign equity transfer: "IX. With regard to foreign joint ventures, the income from equity transfer of investors in foreign-funded enterprises is taxed. The income from equity transfer refers to the transfer income obtained by the foreign joint venturer of a joint venture and the investors of a foreign-funded enterprise, and the part exceeding their capital contribution shall be subject to 20% income tax according to regulations. "

As for the withholding tax rate, China's foreign income tax law stipulates that it is 20%. In 2000, Guo Fa [2000] No.37 "Notice of the State Council on the Reduction of Income Tax on Interest and Other Income of Foreign Enterprises Originating in China" stipulated: "Since 2000, 1.65438, for foreign enterprises that have not established institutions or places in China, the interest, rent, royalties and other income obtained from China, or although they have established institutions,

The process of foreign equity transfer:

1. changes in equity caused by the autonomy of foreign enterprise investors.

(a) the signing of an equity transfer agreement between investors or the signing of an equity transfer agreement between investors and a third party;

(2) When the equity of a Chinese investor investing in state-owned assets changes, it shall submit the opinions on the change of the equity invested by the enterprise signed by the competent department of Chinese investors, and the value of the equity that needs to be changed shall be assessed and confirmed by the state-owned assets management department;

(three) according to the requirements of the original examination and approval authority of foreign-invested enterprises to submit the corresponding documents;

(four) the examination and approval authority shall decide whether to approve or disapprove within 30 days from the date of receiving all the documents.

Two. In case of equity change due to foreign enterprise investors' failure to contribute or insufficient contribution, the procedures for non-breaching investors to apply for equity change are as follows.

(1) The observant party applied to the original examination and approval authority to modify the original contract and articles of association, and was approved.

(2) The application for change, the approval document issued by the original examination and approval authority to modify the original contract and articles of association, the re-issued approval certificate, and the contract and articles of association signed by authorized representatives of the parties to the new joint venture and approved by the examination and approval authority shall be submitted to the original examination and approval authority.

Three. Procedures for changing equity due to legal reasons. Legal reasons refer to the merger, division, bankruptcy, dissolution, cancellation, cancellation or death of foreign enterprise investors. The original examination and approval authority shall go through the formalities of equity change or cancellation of the foreign enterprise in accordance with the law as long as the proof of legal reasons is issued and the resolution of the board of directors and the application for equity change signed by the board of directors are submitted to the original examination and approval authority.

The article lists the income tax rate of foreign equity transfer for you. At the same time, the process of foreign equity transfer has also been sorted out for you. I believe you have a certain understanding of this problem. For other questions about foreign-funded enterprises, you can continue to pay attention to our website, and the gold medal teacher will provide you with one-on-one exclusive answer service. Thank you for your attention.