Ministry of Finance and three other departments: Standardize the personal income tax policy for the transfer of restricted shares in listed companies.

On August 28, the Ministry of Finance, the State Administration of Taxation, and the China Securities Regulatory Commission issued an announcement regarding the regulation of personal income tax policies for the transfer of restricted shares of listed companies. Income from the transfer of restricted shares by individuals will be classified as "capital gains" and is subject to a personal income tax rate of 20%. The restricted shares referred to in this announcement include those defined in Article 2 of the "Notice on the Collection of Personal Income Tax on Income from the Transfer of Restricted Shares of Listed Companies by Individuals" (Cai Shui [2009] No. 167), as well as those generated after the lifting of restrictions and registered after the implementation of this announcement. The cost basis of restricted shares shall be adjusted by the securities registration and settlement company based on the ratio of any stock dividends, transfers, or reductions. The full text is as follows: Announcement on Regulating Personal Income Tax Policies for the Transfer of Restricted Shares of Listed Companies Ministry of Finance, State Administration of Taxation, China Securities Regulatory Commission Announcement No. 26 of 2026 To regulate the personal income tax policies for the transfer of restricted shares of listed companies, the relevant matters are announced as follows: 1. Income from the transfer of restricted shares of listed companies by individuals will be classified as "capital gains" and is subject to a personal income tax rate of 20%. The restricted shares referred to in this announcement include those defined in Article 2 of the "Notice on the Collection of Personal Income Tax on Income from the Transfer of Restricted Shares of Listed Companies by Individuals" (Cai Shui [2009] No. 167), as well as any shares that are generated after the lifting of restrictions and registered after the implementation of this announcement. In the case of stock dividends, transfers, or reductions of restricted shares, the securities registration and settlement company shall adjust the cost basis of the restricted shares according to the ratio of the stock dividends, transfers, or reductions. 2. Listed companies must submit detailed information on the cost basis of restricted shares provided by individual shareholders to the securities registration and settlement company in accordance with the provisions of the "Notice on Issues Related to Personal Income Tax for Individuals Transferring Restricted Shares of Listed Companies After Completion of Technical and Institutional Preparations by Securities Institutions" (Cai Shui [2011] No. 108) when applying for the initial registration of shares. After the implementation of this announcement, if a listed company applies for the initial registration of shares and fails to report the cost basis of restricted shares as required, when individuals transfer restricted shares, the securities institution will compute the withholding tax based on the full amount of income from the transfer of restricted shares at a rate of 20%. After withholding and pre-paying the tax, taxpayers can file a tax settlement according to the provisions of Article 3 of this announcement. For listed companies that have completed the initial registration of shares and have not reported the cost basis of restricted shares before the implementation of this announcement, when individuals transfer restricted shares after this announcement comes into effect, the securities institution may determine the cost basis and reasonable tax expenses based on 15% of the income from the transfer of restricted shares for the purposes of withholding and pre-paying personal income tax. After withholding and pre-paying the tax, taxpayers must file a tax settlement according to the provisions of Article 3 of this announcement. 3. If the taxable amount calculated by a taxpayer based on the actual income and actual cost from the transfer of restricted shares is greater than the amount withheld by the securities institution, or if it is less than the amount withheld and a refund is requested, the taxpayer must provide relevant materials such as the cost basis of the restricted shares to the competent tax authority and file a tax settlement by June 30 of the year following the year of the transfer, allowing for adjustments in tax payment. 4. The term "listed company" as used in this announcement refers to joint stock companies whose shares are traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange. 5. Individuals transferring original shares of companies listed on the National Equities Exchange and Quotations system (hereinafter referred to as the "listed companies") and the Beijing Stock Exchange must comply with the provisions of this announcement for personal income tax. For original shares of listed companies that have completed the initial registration and have not reported the cost basis before the implementation of this announcement, if these shares subsequently enter the Beijing Stock Exchange through public issuance, the securities institution may determine the cost basis and reasonable tax expenses based on 15% of the income from the transfer of original shares for the purposes of withholding and pre-paying personal income tax. After withholding and pre-paying the tax, taxpayers must file a tax settlement according to the provisions of Article 3 of this announcement. 6. This announcement will take effect from the date of publication. Previous provisions that are inconsistent with this announcement will be governed by the provisions of this announcement. This is hereby announced. This article was selected from the "Ministry of Finance official website"; GMTEight editor: Huang Xiaodong.