In order to control short-term speculation, stimulate long-term investment, and build up a sustainable capital market, the State Council approved a new tax policy to promote lower tax burden for investors who hold longer terms of shares.
The new tax rates for dividends are:
|
Holding Periods |
Tax rates |
|
More than 1 year |
5% |
|
Between 1 month and 1 year |
10% |
|
Less than 1 month |
20% |
Azure Group recommends foreign investors to seek both financial and tax review of your investment strategies in the local share market.
The Reform from Business Tax to Value Added Tax has achieved great results
According to a recent Symposium held by the Ministry of Finance (MOF) and the State Administration of Taxation (SAT), the Pilot Scheme of Switching from Business Tax to VAT has achieved great results with a Tax-Cut of over RMB40 Billion in 2012.
Since its initiation in Shanghai on January 1, 2012, the pilot has covered 12 provinces, municipalities and municipalities with independent planning status, including Beijing, the north, east, central and south parts of China and several economic zones like the Bohai Economic Rim, Yangtze River Delta Economic Zone, Pearl River Delta Economic Zone, Western Taiwan Straits Economic Zone, and the Economic Zone along the Middle Reaches of the Yangtze River.
The Pilot scheme of switching is carried out in an orderly manner for transportation industry and some service sectors. The main benefits from this reform are: more VAT deduction for ordinary VAT businesses; less double taxation; lower tax burden for small to medium size business and promote business development of service industries and manufacturing innovation.
Azure Group is expected to see more tax reforms from the China authorities to improve its tax system and create fair market conditions for businesses.
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