Temporary exemption from taxation, significant benefits! These tax enterprises | policies | innovations

On the 22nd, the Ministry of Finance and the State Administration of Taxation announced a batch of six tax preferential policies that are conducive to the sustainable and healthy development of the capital market. The relevant policies will be implemented until the end of 2025 or 2027.

Comprehensive and multi-level support for the sustained and healthy development of the capital market

According to the announcement, the income obtained by overseas individual investors from investing in Chinese domestic crude oil and other commodity futures varieties approved by the State Council for opening to the outside world is temporarily exempt from personal income tax; For bonded delivery of goods futures varieties approved by the State Council for opening to the outside world, value-added tax is temporarily exempted.

Individual investors are temporarily exempt from personal income tax on the price difference obtained from the transfer of domestic depositary receipts issued by innovative enterprises; Implement differentiated personal income tax policies on dividend income obtained by individual investors holding domestic depositary receipts issued by innovative enterprises; The price difference income obtained from the transfer of domestic depositary receipts issued by innovative enterprises during the operation of public securities investment fund managers is temporarily exempt from value-added tax.

Individual mainland investors are temporarily exempt from personal income tax on the transfer price difference income obtained from investing in stocks listed on the Hong Kong Stock Exchange through the Shanghai Hong Kong Stock Connect and the Shenzhen Hong Kong Stock Connect, as well as the transfer price difference income obtained from buying and selling Hong Kong fund shares through mutual fund recognition.

Venture capital enterprises are allowed to choose one of two methods: accounting by a single investment fund or accounting by the annual income of the venture capital enterprise as a whole, and to calculate and pay personal income tax on the income of their individual partners from the venture capital enterprise.

In addition, for taxpayers who obtain equity incentives for listed companies that meet relevant conditions, they are not included in comprehensive income and are fully subject to the comprehensive income tax rate table to calculate and pay personal income tax.

Liang Ji, a researcher at the Chinese Academy of Financial Sciences: The six policies proposed this time are mainly aimed at supporting the healthy and sustainable development of the capital market. The support for the capital market is comprehensive and multi-level. For the healthy, stable, and sustainable long-term development of our entire capital market, it has laid a very good foundation and environment for tax policies.

In addition, experts say that the majority of the tax preferential policies announced this time will continue until the end of 2027, with a long time cycle, which will be more conducive to stabilizing market expectations, enhancing investor confidence, and helping the healthy development of the capital market and the recovery growth of the macroeconomy.

Promote high-level opening-up of the capital market to the outside world

Experts say that the tax preferential policies released this time not only benefit individual investors and investment institutions, but also an important measure to expand the high-level opening of the capital market.

Specifically, in order to support the opening up of the capital market to the outside world, individual mainland investors are temporarily exempt from personal income tax on the transfer price difference income obtained from investing in stocks listed on the Hong Kong Stock Exchange through the Shanghai Hong Kong Stock Connect and the Shenzhen Hong Kong Stock Connect, as well as the transfer price difference income obtained from buying and selling Hong Kong fund shares through mutual fund recognition.

Researcher Liang Ji from the Chinese Academy of Financial Sciences: This brings two benefits. On the one hand, individual investors have higher returns, which actually encourages them to actively invest; On the other hand, it can also promote the development and improvement of the Hong Kong stock market, and bring connectivity between the mainland stock market and the Hong Kong stock market.

Not only does this focus on investors, but the policies announced this time also include policies aimed at opening up the commodity futures market to the outside world.

Liang Ji, a researcher at the Chinese Academy of Financial Sciences, said that the bonded delivery business of futures is exempt from value-added tax. On the one hand, it promotes the opening up of the futures market to the outside world; On the other hand, it improves delivery efficiency and has a good promoting effect on enriching and improving the futures market in the bonded zone.

Clear policy orientation encourages long-term investment

Experts say that among the package of tax and fee preferential policies announced this time, one item worth paying attention to is the implementation of differentiated individual income tax policies, indicating a clear policy orientation and encouraging long-term investment.

According to the announcement, a differentiated personal income tax policy will be implemented on the dividend income obtained by individual investors holding domestic depositary receipts issued by innovative enterprises.

How to understand it? Simply put, the domestic issuance of depositary receipts by innovative enterprises refers to investment certificates issued by overseas listed companies, where some of the already issued and listed stocks are entrusted to local custodian banks for issuance by domestic depositary banks and listed on domestic A-shares for domestic investors to buy and sell, thereby achieving cross regional trading of stocks. Individual investors obtain dividends through holding, and the tax collection standards vary depending on the investment time.

Researcher Liang Ji from the Chinese Academy of Financial Sciences: It is the same as our policy of investing in stocks of domestic listed companies, and also reflects the encouragement of long-term investment. For example, the stock returns and dividend income we receive within a month are subject to full personal income tax; If the investment is made within a month to a year, it will be halved and levied; Investment for more than one year is exempt from personal income tax. This is very beneficial for long-term investment in the overall capital market, avoiding some speculative activities, and promoting the healthy, stable, and sustainable development of the capital market.

Strong targeted support for enterprise innovation and development

Among the 6 tax policies announced this time, there is one preferential policy for personal income tax that everyone must pay close attention to. Experts analyze that adjusting the tax collection method can help support enterprises to better retain talents and achieve innovative development.

According to the announcement, for taxpayers who obtain equity incentives for listed companies that meet relevant conditions, they will not be included in comprehensive income and will be subject to individual income tax calculation and payment separately based on the comprehensive income tax rate table. This policy will continue to be implemented until the end of 2027. Not only that, the policy announced this time also stipulates that venture capital enterprises can pay personal income tax on the income of their individual partners through a "two choice" approach. Experts believe that this regulation will further alleviate the pressure on taxpayers and stimulate the sustained and healthy development of venture capital enterprises.