SAT Regulated Individual Income Tax on Equity Incentives
Listed firms or their branches in the territory of China shall withhold the individual income tax (IIT) on incomes which the individuals acquire from the equity incentives of shares appreciation rights and restricted shares.
Under the Circular on Issues Concerning the Individual Income Tax on Equity Incentives (Circular) released by the State Administration of Taxation (SAT) on August 24, 2009, listed firms shall withhold the IIT on the individuals' incomes according to the relevant formula as stipulated by CaiShui [2005] No. 35 if they acquire the incomes from the equity incentives of stock appreciation rights and restricted stock for the first time in the taxation year.
Besides, if the incentive beneficiary sell the stocks for their IIT payment, and the prices are inconsistent with the original taxable price, the IIT taxable shall be calculated based on the original taxable price.
(Source: State Administration of Taxation)
(Oct.14th 2009)
