Individual income tax on income from transfer of restricted shares shall be collected through a combination of such ways as advance withholding and prepayment by securities institutions, declaration and settlement by the taxpayers themselves and direct withholding and payment by securities institutions. The amount of tax payable shall be calculated by the taxpayer according to the actual income from transfer and the actual cost, and if there is any discrepancy between tax payable and the tax pre-withheld and prepaid by the securities institution, the taxpayer shall, within three months from the first day of the following month after the advance withholding and prepayment of the tax by the securities institution, apply for settlement to the competent tax authority in the place where the securities institution is located, and handle the matters concerning the declaration and settlement of tax.

1. Two copies of Tax Return for Settlement of Individual Income Tax on Income from Transfer of Restricted Shares

2. One original of ID card which will be returned after examination

3. One detailed record of transactions of restricted shares (with seal of the securities institution in which the securities account is opened)

4. One certificate of original value of property

Materials submitted according to different circumstances

1.Where start-up technological enterprises invested by individual angel investors are listed and such individual angel investors meet the preferential conditions for deducting tax with investment, the amount of investment that has not yet been deducted shall be deducted when applying for clearing of tax on income from transfer of restricted shares. The following materials shall be provided: 

A. Two copies of Information Form on Deduction of Individual Income Tax with Investment for Angel Investors (to be submitted to the competent tax authority before the 15th day of the following month of equity transfer or during the clearing of transfer of restricted shares)

B. Two copies of Record Form on Deduction of Individual Income Tax with Investment for Angel Investors (to be submitted to the competent tax authority before the 15th day of the following month)

2. In case that the declaration is submitted by an authorized agent, the following materials shall be provided:

A. One original of ID card of the authorized agent which shall be returned after examination

B. One letter of authorization from the taxpayer concerning tax declaration by an authorized agent

1. Processing time and place

Please see the tax service guide for details of the processing time and address of the tax service halls in each district (region).

2. Processing time limit

Immediate completion of processing

3. Processing fee

Free of charge

1. Taxpayers shall be responsible for the authenticity and legality of the materials submitted.

2. The forms can be found and downloaded in the "download center" section on the website of the provincial tax administration (autonomous regions, municipalities directly under the central government and municipalities with independent planning) or collected in tax service halls.

3. The tax authorities provide "one-visit at most" service. Taxpayers only need to visit the tax authorities once at most on the precondition that the materials are complete and meet the legal conditions for acceptance.　　

4. Where a taxpayer fails to file the tax declaration and submit the tax materials within the prescribed period, the result of tax credit evaluation will be affected, and the taxpayer shall assume corresponding legal liabilities in accordance with the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection. 　

5. Tax officers verified by real-name information will no longer provide materials like registration certificates and copies of ID cards.

6. Restricted shares include:

A. the original non-tradable shares held by shareholders after the share-trading reform of a listed company is completed but before the day when the stock is resumed for trading, and the bonus shares and transferred shares bred by the aforesaid shares from the day when the stock is resumed for trading to the day when the restricted shares are released from trading restrictions (hereinafter referred to as restricted shares formed by share-trading reform);

B. the restricted shares of a company which initially offers shares to the public and gets listed after separating the old ones from the new ones under the share-trading reform in 2006, and the bonus shares and transferred shares bred by the aforesaid shares from the first day when the company gets listed to the day when the restricted shares are released from trading restrictions (hereinafter referred to as restricted shares formed by initial public offering);

C. the restricted shares on which the restrictions have not been lifted and which are transferred to individuals by institutions or other individuals;

D. the restricted shares which are inherited by individuals according to the law or are obtained by individuals from the division of family properties according to the law;

E. the restricted shares which are held by individuals and are shifted from the agency share transfer system to the main board market (or to small and medium enterprises board market or growth enterprises board market);

F. the merging company's shares which are, in the case of merger of listed companies, converted from the former merged company's restricted shares held by individuals;

G. the post-split company's shares which are, in the case of split-up of a listed company, converted from restricted shares of the split-up company; and

H. other restricted shares

7. An individual shall pay individual income tax on the economic benefits received in cash or in kind, in negotiable securities and other forms which are derived from the transfer of restricted shares or any other transaction which constitutes transfer of restricted shares in nature. If the restricted shares are transferred for two or more times before the restrictions are lifted, the transferor shall pay individual income tax on the income derived from each transfer as prescribed by relevant provisions. The individual income tax shall be collected under the following circumstances:

A. An individual transfers restricted shares through the centralized trading system or block trading system of stock exchanges;

B. An individual subscribes to or purchases shares of the Exchange Traded Fund (ETF) with restricted shares;

C. An individual accepts an offer of purchase with restricted shares;

D. An individual exercises cash option to transfer restricted shares to a third party who provides cash option;

E. An individual transfers restricted shares through an agreement;

F. The restricted shares held by an individual are legally transferred by the judicial authority to someone else;

G. An individual inherits the title to restricted shares according to the law or assigns the title to restricted shares for the division of family properties according to the law;

H. An individual employs restricted shares to repay the consideration which the big shareholder paid on his or her behalf to shareholders of tradable shares during the share-trading reform of a listed company; and

I. any other circumstance which constitutes transfer in nature.

Under Document No. 167 [2009] of the Ministry of Finance, the payable individual income tax under any of the circumstances as described in subparagraphs A. to D. shall be levied through a combination of such ways as advance withholding and prepayment by securities institutions, declaration and settlement by the taxpayers themselves and direct withholding and payment by securities institutions. Taxpayer shall calculate the tax payable on the basis of the actual income from transfer and the actual cost. If there is any discrepancy between tax payable and the tax pre-withheld and prepaid by the securities institution, the taxpayer shall, within 3 months from the first day of the following month after the advance withholding and prepayment of the tax by the securities institution, apply for settlement to the competent tax authority in the place where the securities institution is located, and handle the matters concerning the declaration and settlement of tax.

Where a taxpayer is under any of the circumstances as described in subparagraphs E. to H., he or she shall file a tax declaration and pay the tax by him or herself. After the transfer of restricted shares, the taxpayer shall fill in and file the "Tax Return for Settlement of Individual Income Tax on Income from Transfer of Restricted Shares" with the competent tax authority to make the tax declaration by him or herself before the 15th day of the following month.

8. Where an individual applies for modification registration for transfer of equities, the registration authority of the market entity shall verify the receipt of payment of individual income tax related to the equity transaction.

9. The materials related to the tax benefits enjoyed by the taxpayer according to the law shall be retained for future reference or submission according to relevant regulations.