Tax Issues Regarding Equity Transfer
1. Application for Enterprise Registration (Filing)
1) The Application for Enterprise Registration (Filing) must be signed by the company's legal representative and stamped with the company's official seal. If the company changes its legal representative, the application form must be signed by the new legal representative.
2) The information provided contains no significant text errors and aligns with other submitted materials, such as supporting documents.
3) The registration items must match the submitted materials, and the quantity of materials shall fulfill the specified requirements.
2. Commitment Letter
Beijing has implemented a registration notification and commitment system for market entities. Applicants seeking registration under this system must submit a commitment letter together, which must be personally signed by both the legal representative and the applicant.
3. Equity transfer agreement or equity delivery document
1) If a shareholder transfers all the equities to other shareholders, he/she shall submit an equity transfer agreement or equity delivery document signed by both sides.
2) If a shareholder transfers his/her equities to an individual who is not a shareholder, he/she must submit a document agreed by over half of the other shareholders; if the shareholder receives no response from the other shareholders within 30 days of sending the transfer notice, he/she must submit a written notice regarding the transfer to the other shareholders. Additionally, an equity transfer agreement or equity delivery document signed by both sides, must be submitted.
3) If a natural person shareholder is changed, the individual income tax payment or tax return voucher related to the equity transaction shall be submitted.
4. Shareholder qualification proof or a copy of a natural person's identity certificate.
The copy of the new natural person's identity certificate, following the name change, is clear, complete, and within the validity period.
5. Resolutions or decisions of shareholders' meetings
Limited liability companies must provide resolutions signed by shareholders representing over two-thirds of the voting rights. For a single-member limited liability company, a signed, written shareholder decision must be submitted.
6. Articles of Association or Amendment to the Articles of Association
1) It must be noted that "In the event of any inconsistencies between the Articles of Association and applicable laws and regulations, the provisions of the laws and regulations shall prevail".
2) Whether the registration items recorded in the Articles of Association align with those in the application form or other submitted materials;
3) It must be signed in person by the company's legal representative. If the company changes its legal representative, the new legal representative must also sign in person.
7. Original and duplicate business licenses
All original and duplicate business licenses shall be submitted.
It is a legal requirement for a market entity to register under a real name in accordance with the
Regulations of the People's Republic of China on the Registration Administration of Market Entities.
Therefore, when registering a company, investors must cooperate with the registration authority to
verify their identity information, declare their name, identity certificate number, investment amount,
investment time, and other pertinent details on the registration application form, and submit
identification documents as required.
(I) If the group of investors include domestic investors, the identity certificates can be prepared using one of the following types:
A natural person shall submit a copy of his/her ID card.
An enterprise shall submit a copy of its business license.
(II) If the group of investors include overseas investors, the identity certificates can be prepared using one of the following types:
Identification documents of natural persons:
1)A natural person shall submit a copy of his/her passport. The passport shall be notarized by a
notary authority in the country of issuance and then authenticated by the Chinese embassy (consulate)
in that country. If there are no diplomatic relations between the investor's home country and China,
the documents shall first be authenticated by the embassy (consulate) of a third country that maintains
diplomatic relations with China, and then further authenticated by the Chinese embassy (consulate) in
that third country. For documents originating from the overseas territories of certain countries,
they must first be notarized in that territory, followed by authentication by the country's main
diplomatic authority, and finally by the Chinese embassy (consulate) in that country. This process
may be subject to different requirements where international treaties concluded or jointly participated
in by China provide otherwise.
2) If foreign natural persons submit passports bearing visas issued by a Chinese embassy or consulate
and the entry procedures have been confirmed by the Chinese exit-entry administration, notarization
is not required, provided that the original documents have been verified.
3) Investors from the Hong Kong Special Administrative Region (SAR), Macao SAR, and the Taiwan region
are required to submit notarized documents issued by local notary authorities in accordance with specific
regulations or agreements to validate their qualification or identity certificates. For natural person
investors from the Hong Kong SAR and Macao SAR, acceptable identity documents include the local Permanent
Resident ID cards, Special Administrative Region passports, Residence Permits for Hong Kong and Macao
Residents issued by the Chinese mainland's public security departments, and the Mainland Travel Permits
for Hong Kong and Macao Residents issued by the Chinese mainland's exit-entry administration authorities.
There's no need for notarization for those presenting the Residence Permits for Hong Kong and Macao
Residents or the Mainland Travel Permits for Hong Kong and Macao Residents as their identity proof.
Similarly, natural person investors from the Taiwan region can use the Residence Permit for Taiwan
Resident issued by the Chinese mainland's public security departments or the Mainland Travel Permit
for Taiwan Resident issued by the Chinese mainland's exit-entry administration authorities as their
identity proof without the need for notarization.
Identification documents of non-natural persons:
1) The certificate of legal person qualification, notarized by a notarial authority in the country
of issuance and authenticated by the Chinese embassy (consulate) in that country, shall be submitted
as a form of identification. If there are no diplomatic relations between the investor's home country
and China, the documents shall first be authenticated by the embassy (consulate) of a third country
which maintains diplomatic relations with China, and then further authenticated by the Chinese embassy
(consulate) in that third country. For documents originating from the overseas territories of certain
countries, they must first be notarized in that territory, followed by authentication by the country's
main diplomatic authority, and finally by the Chinese embassy (consulate) in that country. This process
may be subject to different requirements where international treaties concluded or jointly participated
in by China provide otherwise.
2) Non-natural person investors from Hong Kong SAR or Macao SAR may use simplified notarized documents
when registering in Beijing. For investors from Hong Kong SAR, the simplified notarization documents
consist of a Certificate and three annexes: First, a certified true copy or photocopy of the company's
registration certificate; second, a certified true copy or photocopy of the company's business registration
certificate; third, the minutes or extracts of meetings of the company's board of directors or shareholders,
or a certified true copy or photocopy of the resolutions or resolution extracts of such meetings. For
investors from the Macao SAR, two types of notarized documents are accepted. One type is a notarization
certificate issued by China Legal Services (Macao) Ltd.; the other is a notarization certificate issued
by a Chinese commissioned notary public in Macao, which must bear the Special Verification Seal of China
Legal Services (Macao) Ltd.
Special Reminders:
1) If a foreign-invested enterprise has been established with any registration authority in Beijing,
Tianjin, or Hebei, and the enterprise's foreign investors have completed the required verification,
they may, within the validity period of the qualification certificate, invest in the other two regions.
In this case, the foreign investors can provide a photocopy of the qualification proof for the established
enterprise, issued by the archives department of the registration authority and bearing an archival
certification stamp, as the qualification proof.
2) According to the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign
Public Documents (Apostille Convention), starting from November 7, 2023, certification documents from
relevant embassies (consulates) of contracting states to the Apostille Convention will be changed to
notarized documents issued by relevant authorities of their respective countries, along with additional
certificates issued by local competent authorities. The original consular authentication procedure will
continue to be used between China and non-contracting states to the Apostille Convention. Furthermore,
the Apostille Convention does not apply to document exchanges between Beijing and Hong Kong SAR, Macao
SAR, and Taiwan Region. For information on the contracting states to the Apostille Convention, additional
certificate verification websites, and relevant authorized authorities, please visit the China Consular
Affairs at http://cs.mfa.gov.cn/.
According to the Company Law of the People's Republic of China, the registered capital of a limited liability company is the total amount of contributions subscribed by all shareholders and registered with the company registration authority in charge. All shareholders must fully pay their subscribed capital within five years from the company's establishment date. During the registration process, shareholders, regardless of their nationalities, can subscribe to the registered capital following the articles of association.
Shareholders may make capital contributions in cash or through non-monetary assets including physical objects, intellectual property rights, land use rights, equities and debts that can be valued in monetary terms and legally transferred. If there are specific provisions in laws, administrative regulations, or the State Council's decisions regarding the paid-in registered capital of a company, including minimum registered capital requirements and the timelines for shareholder contributions, those provisions shall prevail.
According to the Regulations on the Implementation of the Foreign Investment Law of the People's Republic of China, the registered capital of foreign-invested enterprises may be denominated in CNY or any of the freely convertible currencies.
After completing the transfer of equities, new shareholders shall pay their capital contributions in full and on time, following the provisions of the Company Law of the People's Republic of China.
Applicants may choose to complete the company registration online or in-person according to their needs.
1. Online Application
Every applicant can log in to the Beijing Enterprise Service E-window Platform (https://ect.scjgj.beijing.gov.cn/), click on "Corporate Services (for Change, Filing, Cancellation, Increase/Decrease Duplicates of Business License, and Reissuance/Replacement of Business License)" (法人服务(变更、备案、注销、增减补换照)), select the type of application, and follow the platform's prompts to proceed. Documents required for submission, such as the entity qualification certificate, identity documents, approval certificates, articles of association, and resolutions can be uploaded via the Platform in the form of images or photocopies of the original copies or as materials generated by the system.
2. Offline Application
Every applicant can also visit the website of the Beijing Municipal Administration for Market Regulation to access application services. By clicking "Application Services" (办事服务), "Form Download" (表格下载), and then "Registration" (登记注册), an applicant can obtain materials such as the Notification, Commitment Letter, and Application for Enterprise Registration (Filing) (公司登记(备案)申请书). After filling out all required fields according to relevant guidelines, the applicant shall submit application materials and his/her identity document to the registration department of the district-level market administration authority where the market entity is located.
For equity transfer, withholding agents and taxpayers shall declare corporate income tax, individual
income tax, stamp duty, and other types of tax to the tax authorities. Where withholding agents and
taxpayers declare and pay individual income tax, they shall finish the declaration processes following
the Announcement of the State Taxation Administration on Issuing the Measures for the Administration
of Individual Income Tax on Equity Transfer Income (Trial) (Announcement No. 67 [2014] of the State
Taxation Administration), the Notice for Market Regulation on Work Related to the Administration of
Individual Income Tax on Equity Transfer Income, by Beijing Municipal Tax Service of State Taxation
Administration, and Beijing Municipal Administration (Announcement No. 3 [2021] of the Beijing Municipal
Tax Service of the State Taxation Administration), and other relevant documents. For other specific
information, please contact the tax authority in charge.
1. If the submitted materials require signatures, please refer to the notes for applicants in the
application form. If no signatory is specified and the applicant is a natural person, the applicant
must sign personally. If no signatory is specified and the applicant is a legal entity or an
organization of any other type, its legal representative, person in charge, or authorized signatory
shall sign and affix the official seal. If it is impossible to sign in person, a power of attorney
signed by the authorizer must be submitted. The power of attorney must be an original document signed
personally by the authorizer. The authorized person must cooperate with the registration authority
for real-name authentication.
2. For any submitted material or notarized document in a foreign language, a Chinese translation
bearing the official seal of the translation agency must be attached. The translation agency must
certify that the translation is accurate on the translation document. If the investor's name appears
in a non-English language, his/her English name shall be included in the translation. If the translator
is a legal entity, the translation document must be stamped with the official seal of the translation
agency (special seal for translation) or attached with a photocopy of the entity qualification
certificate (such as a business license), and the translator's name and contact information shall be
indicated. If the translator is a natural person, the contact information shall be indicated on the
translation document, and a photocopy of the translator's corresponding translation qualification
certificate or identity document shall be attached.
3. The registration of market entities entail real-name authentication, as stipulated by the Regulations
of the People's Republic of China on the Registration Administration of Market Entities. Investors and
all other individuals involved must cooperate with the registration authorities to verify their identity
information. For details on the method and process of real-name authentication, please refer to the Guide
for Foreign Nationals to Apply for Real-name Authentication of Foreign-Invested Companies in Beijing.
If applicants cannot verify their identity information through the real-name authentication system due
to special circumstances, they may submit notarized identity documents of natural persons, or they may
apply in person using their identity documents.