According to the “Individual Income Tax Law of the People’s Republic of China” and its implementation regulations, the “Tax Collection and Administration Law of the People’s Republic of China” and its implementation rules, and the “Announcement of the State Administration of Taxation on the Release of the Measures for the Administration of Individual Income Tax on Income from Equity Transfer (Trial) (State Administration of Taxation Announcement No. 67 of 2014)”, the State Administration of Taxation Shanghai Municipal Taxation Bureau and Shanghai Municipal Administration for Market Regulation jointly manage the personal income tax on the transfer of equity by individuals.

Starting from December 20, 2022, individuals who transfer equity and handle shareholder change registration should, before applying for registration with the market regulation department, complete tax declaration at the tax authority in charge of the place where the invested enterprise is located in accordance with the law. (In short, individuals who transfer shares should first complete tax declaration and then do business registration.)

Based on practical operation experience, the following are the materials required for tax settlement for equity transfer:

• Reports stamped with official seals for the two months before and after the transfer
• Copies of all business documents stamped with official seals (including equity transfer agreements, shareholder resolutions, articles of association, etc.)
• Copies of identification documents of all parties involved in the transfer stamped with official seals
• Copies of business licenses stamped with official seals
• Payment vouchers stamped with official seals for the transfer of equity by all parties

The tax officer will make a decision on whether to pay taxes or not within one week after receiving the materials. With the approval, the enterprise can then proceed to apply for business registration with the market regulation department.