The Notice of State Taxation Administration of The People's Republic of China of the Ministry of Finance on Extending the Pilot Tax Policy of National Independent Innovation Demonstration Zone to the Nationwide Implementation (Cai Shui [2015]16No.) stipulates that individual shareholders shall be subject to individual income tax at the rate of 20% according to the items of "income from interest, dividends and bonuses". At the same time, it is stipulated that since 20 16 1 month 1 day, when small and medium-sized high-tech enterprises nationwide transfer their share capital to individual shareholders with undistributed profits, surplus reserves and capital reserves, if it is really difficult for individual shareholders to pay personal income tax at one time, they can make their own tax payment plan by installments according to the actual situation, within no more than five calendar years (including

The Announcement of State Taxation Administration of The People's Republic of China on the Collection and Management of Individual Income Tax on Equity Incentives and Share Capital Transfer (State Taxation Administration of The People's Republic of China Announcement No.80 in 20 15) further stipulates that small and medium-sized high-tech enterprises that are not listed and not listed in the national share transfer system for small and medium-sized enterprises will transfer their share capital to individual shareholders with undistributed profits, surplus reserves and capital reserves, which is in line with the requirements of finance and taxation [2015]/kloc- Other enterprises that are not listed and not listed in the national share transfer system for small and medium-sized enterprises shall withhold and pay personal income tax in time.

The Notice on Issues Concerning Individual Income Tax Policy for Dividends and Dividends of Listed Companies (Caishui [20 1 5]1KLOC-0/No.) stipulates that if an individual holds shares of listed companies from the public offering and transfer market for more than1year, the dividend income will be temporarily exempted from individual income tax. If an individual obtains shares of a listed company from the public offering and transfer market, and the holding period is within 1 month (including 1 month), the dividend income shall be fully included in the taxable income; If the holding period is from 1 month to 1 year (inclusive), the temporary reduction shall be included in the taxable income by 50%; The above income is uniformly taxed at the rate of 20%.

According to the Enterprise Income Tax Law of the People's Republic of China, dividends, bonuses and other equity investment income between qualified resident enterprises are tax-free income.

Therefore, individual shareholders who receive undistributed profits and transfer them to share capital are exempt from tax or pay personal income tax according to the specific circumstances. Domestic resident enterprises transfer undistributed profits to all shareholders' investment, which is equivalent to shareholders' additional investment after obtaining equity investment income. corporate shareholders (resident enterprises) obtains dividends, bonuses and other equity investment income as tax-free income.