Page 6 - THE SOUTH CHINA BUSINESS JOURNAL
P. 6
PTH
Companies with Equity-
Based Compensation Plans
are Subject to More Reporting
Obligations in China
By Zoey Zhang, China Briefing, Dezan Shira & Associates
On October 12, 2021, the State Tax filing requirements. The domestic entity is also
Administration (STA) released the Notice responsible for withholding the IIT on the income
to Further Deepen the “Fang Guan Fu” Reforms that the employees derive from the equity-based
to Cultivate and Stimulate the Vitality of Market compensation plan (the income will be taxed as the
Entities (hereafter Notice [2021] No.69) aimed employee’s wages and salary).
at deepening tax reform. As part of the reform,
the notice further strengthens the administration In the Reporting Form on the Status of Equity-
of individual income tax (IIT) on the income derived Based Incentives, companies will need to fill out
from equity-based incentives. the information concerning the companies, the
types of equity-based incentives, list of staff who
Companies that implement equity-based receive the equity-based incentives, including
compensation plans (such as stock appreciation granted shares, awarded/strike prices, and so on.
rights, stock options, and restricted stocks) will
have to submit the Reporting Form on the Status of
Equity-Based Incentives (shown below), as well as
some other relevant documents, to the tax authority
in charge within the first 15 days of the month
following the decision to implement such a plan.
In addition, if the equity-based compensation plan
being implemented hasn’t been closed this year, the
company is obliged to submit the Reporting Form as
well as relevant materials to the tax authority in
charge by the end of 2021.
If a domestic company rewards its employees
with equity of an overseas company, the
domestic company must also follow the above
3 AMCHAM SOUTH CHINA
Companies with Equity-
Based Compensation Plans
are Subject to More Reporting
Obligations in China
By Zoey Zhang, China Briefing, Dezan Shira & Associates
On October 12, 2021, the State Tax filing requirements. The domestic entity is also
Administration (STA) released the Notice responsible for withholding the IIT on the income
to Further Deepen the “Fang Guan Fu” Reforms that the employees derive from the equity-based
to Cultivate and Stimulate the Vitality of Market compensation plan (the income will be taxed as the
Entities (hereafter Notice [2021] No.69) aimed employee’s wages and salary).
at deepening tax reform. As part of the reform,
the notice further strengthens the administration In the Reporting Form on the Status of Equity-
of individual income tax (IIT) on the income derived Based Incentives, companies will need to fill out
from equity-based incentives. the information concerning the companies, the
types of equity-based incentives, list of staff who
Companies that implement equity-based receive the equity-based incentives, including
compensation plans (such as stock appreciation granted shares, awarded/strike prices, and so on.
rights, stock options, and restricted stocks) will
have to submit the Reporting Form on the Status of
Equity-Based Incentives (shown below), as well as
some other relevant documents, to the tax authority
in charge within the first 15 days of the month
following the decision to implement such a plan.
In addition, if the equity-based compensation plan
being implemented hasn’t been closed this year, the
company is obliged to submit the Reporting Form as
well as relevant materials to the tax authority in
charge by the end of 2021.
If a domestic company rewards its employees
with equity of an overseas company, the
domestic company must also follow the above
3 AMCHAM SOUTH CHINA
