The Ministry of Finance, in collaboration with relevant departments, has announced a series of measures to provide tax and fee incentives to support the healthy development of capital markets in China. These measures aim to promote the two-way opening and healthy growth of mainland and Hong Kong capital markets.
To facilitate the opening and development of the mainland and Hong Kong capital markets, the announcement specifies that mainland individual investors who gain income from the price difference of Hong Kong-listed stocks acquired through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, as well as from the price difference of Hong Kong fund units obtained through mutual recognition, will continue to be exempt from personal income tax.
To support the opening-up of commodity futures markets, the announcement clarifies that overseas individual investors who gain income from China’s domestically traded commodity futures, such as crude oil, approved by the State Council for foreign investment, will be temporarily exempt from personal income tax. For bonded delivery transactions of commodity futures varieties approved by the State Council for foreign investment, temporary exemptions from value-added tax will be granted.
To further the innovation-driven development strategy, the announcement states that individual investors who transfer or hold depositary receipts of innovative enterprises will receive personal income tax incentives. Additionally, gains from transferring depositary receipts of innovative enterprises acquired by fund managers during the operation of publicly offered securities investment funds will be temporarily exempt from value-added tax.
In support of the development of venture capital enterprises, the announcement allows venture capital firms to choose between accounting based on a single investment fund or accounting for the overall annual income of the venture capital enterprise. Personal income tax will be calculated and paid based on income derived from venture capital enterprises for their individual partners. Furthermore, to encourage corporate innovation, equity incentives of listed companies will not be integrated into comprehensive income, and individual income tax will be calculated and paid using separate income tax rate tables.
The policies outlined in the announcement will be in effect until the end of 2025 or 2027. These measures are designed to bolster the opening-up of capital markets and promote their continued healthy development. Previously, the Ministry of Finance, along with relevant departments, had released ten tax and fee incentives to support small and micro enterprises as well as individual businesses.
The Ministry of Finance has stated that it will work closely with relevant departments to implement these policies accurately, ensuring that the benefits of the policies reach business entities directly. Meanwhile, in accordance with the State Council’s executive meeting arrangements, further arrangements for other tax and fee incentive policies will be announced in an orderly manner. These efforts aim to alleviate difficulties for business entities and drive sustained economic recovery and improvement.