The Ministry of Finance and the State Administration of Taxation adjust preferential income tax policies

Employees will no longer pay taxes when receiving equity incentives

According to the "Notice", equity incentives (including stock options, equity options, restricted stocks and equity awards) granted to employees of the company by unlisted companies after September 1 this year can implement a deferred tax policy, that is, employees can temporarily not pay taxes when receiving equity incentives, and the tax will be deferred until the transfer of the equity. When equity is transferred, the difference between the equity transfer income after deducting the equity acquisition cost and reasonable taxes and fees shall be applied to the "property transfer income" item, and the personal income tax shall be calculated and paid at a tax rate of 20%.

For stock options, restricted stocks and equity awards granted to individuals by listed companies, personal income tax can be paid within a period of no more than 12 months from the date of exercise of stock options, release of restricted stocks or receipt of equity awards.

It is reported that according to the tax policy before the adjustment, the stock (right) options, restricted stocks, equity awards, etc. given by the company to employees should be taxed according to the "wage and salary income" item in the exercise and other links, and a 7-level progressive tax rate of 3% to 45% will be applied. The value-added income obtained by the employee from the subsequent transfer of the equity will be taxed according to the "property transfer income" item at a tax rate of 20%.

The person in charge of the Taxation Department of the Ministry of Finance introduced that this policy adjustment will combine the original taxation in two links to taxation in one link. Taxpayers will not be taxed temporarily when stock options are exercised, restricted stocks are lifted, and equity awards are received. Taxpayers will be taxed in one go when the equity is transferred in the future, which solves the problem of insufficient cash flow for tax payment in exercise and other links. At the same time, a uniform tax rate of 20% is applied to the one-time taxation during the transfer process, which is 10-20 percentage points lower than the original tax burden, effectively reducing the tax burden of taxpayers. In addition, in order to solve the time difficulty in paying taxes for equity incentive targets of listed companies, this policy adjustment further extends the tax payment period for equity incentives of listed companies from 6 months stipulated in the current policy to 12 months.

The person in charge said that the above-mentioned policies have further increased support for innovation and entrepreneurship, and will play an important role in motivating scientific and technological personnel to innovate and start businesses, enhance the vitality of economic development, and promote the transformation and upgrading of my country's economic structure.

Technology shares can be tax deferred

In order to encourage enterprises and individuals to invest in technology shares, the "Notice" stipulates that if an enterprise or individual invests in a domestic resident enterprise with technological achievements, and the consideration paid by the invested enterprise is all stocks (rights), the enterprise or individual may choose to continue to follow the current relevant tax policies, or may choose to apply the preferential deferred tax policy. Taxpayers who choose the tax deferral policy for investing in technological achievements and investing in shares are not required to pay taxes for the current period. The tax is allowed to be deferred until the transfer of equity. The income tax is calculated and paid based on the difference between the income from the equity transfer minus the original value of the technological achievements and reasonable taxes and fees.

“These preferential policies will significantly reduce the tax burden on enterprises and individuals investing in technological achievements and actively promote the transformation of scientific and technological achievements.” According to the person in charge of the Income Tax Department of the State Administration of Taxation, according to the current tax policy, enterprises or individuals who invest in technological achievements and invest in shares should pay income tax on the assessed value-added part, and are allowed to pay tax in installments within 5 years. This time, the tax policy for investment in technological achievements has been adjusted. Based on the current policy, the policy option of deferred taxation has been added. At the same time, it is stipulated that no matter which policy the investor chooses to apply, the invested enterprise can record the technological achievements according to the assessed value and deduct amortization before tax.

"Implementing preferential tax policies for equity incentives and technology investments can fully mobilize the enthusiasm of scientific researchers, promote the implementation of the national entrepreneurship and innovation strategy, and maximize the transformation of scientific and technological achievements into real productivity." The person in charge of the Taxation Department of the Ministry of Finance said that the adjustment of relevant income tax policies fully takes into account international experience and my country's actual situation, and the policy effect is mainly reflected in three aspects:

First, equity incentives are divided into two categories: those that can enjoy tax preferences and those that cannot enjoy tax preferences. Under the premise of stipulating strict restrictions, a deferred tax preferential policy will be implemented for equity incentives of qualified unlisted companies;

The second is to expand the coverage of current preferential policies from universities, scientific research institutions, high-tech enterprises, etc. to other market entities involved in innovation and entrepreneurship. The equity incentive methods targeted by preferential policies are also expanded from the current equity awards to stock (right) options, restricted stocks and other methods;

Third, in terms of preferential methods, a deferred tax policy is implemented for eligible equity incentives and the applicable tax rate is reduced. These adjustments have effectively reduced the tax burden on equity incentives and will further stimulate and release the vitality and enthusiasm of scientific researchers for innovation and entrepreneurship.