China Tax/Business News Flash

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By International Assignment Services

Jul 2014, Issue 15

Increasing scrutiny on equity based incentive plans may impact assignees and their employers

In China, listed companies implementing equity based incentive plans are required to register the plan with the in-charge local tax bureau. This requirement was first introduced in 2005 by Cai Shui [2005] No. 35 (Circular 35) and was reiterated in Guo Shui Han [2009] No. 461 (Circular 461). Over the years, the enforcement and implementation of this requirement has varied from one location to the other. In recent months, we have observed that many local tax bureaus have started to tighten the tax registration requirements and related tax compliance administration concerning equity based income.

In this alert, we share some latest developments in this area so that companies can take necessary steps to mitigate their exposures.

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