On December 1, 2023, the 07th edition of China Tax News published an article titled "Individual Equity Transfer: How to Confirm the Original Value of Equity at Different Stages" by Wang Lian. Teacher Jiang Xinlu also commented on the article in his WeChat *** Longshang Tax Language. The full text is now given **, and we will share it with you.
Some time ago, a company to be listed on the stock market was questioned by the Listing Review Committee of the Shenzhen Stock Exchange because the chairman failed to pay individual income tax on the transfer of personal equity, which attracted attention. It is understood that although individual taxpayers have paid more and more attention to the tax-related issues of equity transfer in recent years, due to the complexity of this business, some taxpayers often cause tax risks due to improper operation. Based on the author's experience, the determination of the original value of equity requires the attention of relevant taxpayers. King Wen is on a leash
Case Introduction
A limited liability company was established in April 2008 with a registered capital of 5 million yuan, and its shareholders are all natural persons. In 2015, Company A was restructured into a share* and introduced a new natural person shareholder, and the registered capital was changed to 6 million yuan, realizing the capital increase and share expansion. From January to May 2017, some natural person shareholders of Company A successively transferred their equity, which was transferred at both parity and premium, and the equity transfer was higher than the share of net assets, and the natural person shareholders who transferred equity at a premium have paid individual income tax. After the transfer of equity by a natural person shareholder, some shareholders were added to the register of shareholders of Company A, but the registered capital was still 6 million yuan (hereinafter referred to as the transfer).
In January 2018, Company A was listed on the National Equities Exchange and Quotations (hereinafter referred to as ***). In June 2018, the general meeting of shareholders of Company A approved the 2017 equity distribution plan, that is, based on the company's existing total share capital of 6 million shares, 6 bonus shares will be given to all shareholders for every 10 shares based on undistributed profits666667 shares. At the same time, the other capital reserve formed by the premium is increased by 8 per 10 shares to all shareholders333333 shares. After the distribution of equity, the registered capital of Company A was changed from 6 million yuan to 15 million yuan, and the industrial and commercial change registration was carried out. In this way, Company A completes the first equity distribution.
**After listing, some natural person shareholders bought and sold the shares of Company A in the secondary market, and the total number of changes in the shares in the secondary market was 0. In May 2020, the general meeting of shareholders of Company A resolved to approve the 2019 equity distribution plan, that is, based on the company's existing total share capital of 15 million shares, 6 bonus shares for every 10 shares of undistributed profits will be given to all shareholders. The total share capital of the company was 15 million shares before the dividend, and the total share capital increased to 24 million shares after the dividend, and the industrial and commercial change registration was carried out. In March 2023, Company A terminated its listing on *** upon application.
Natural Person A is a shareholder of Company A. At the beginning of April 2023, some natural person shareholders of Company A, including A, decided to withdraw from the company and transfer all their respective shares to two of the major shareholders, and the equity agreement** was higher than the share of net assets at the end of the previous month.
Raw value analysis
It is understood that natural person A is the new shareholder introduced by Company A when it increased its capital and shares in 2015. The Agreement on Capital Increase and Share Expansion stipulates that A subscribes for the registered capital of Company A of RMB 120,000 at a ratio of 6:1 at a price of RMB 720,000 in cash, accounting for 2% of the paid-in capital of Company A. Among them, 120,000 yuan is the registered capital, and the remaining 600,000 yuan is included in the capital reserve. So how should A confirm the original value of this part of the equity?
According to Article 15 of the Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Individual Income Tax on Income from Equity Transfer (for Trial Implementation) (Announcement No. 67 of 2014 of the State Administration of Taxation, hereinafter referred to as Announcement No. 67), the original value of the shares obtained by way of cash contribution shall be determined according to the sum of the actual price paid and the reasonable taxes directly related to the acquisition of the equity. In practice, the tax authorities will directly calculate the original value of the share transfer based on the amount listed in the Agreement on Capital Increase and Share Increase and the payment certificate of capital contribution. Based on this, the original value of the shares held by A was $720,000.
In the 2017 transfer acquisition stage, A purchased 60,000 shares of Company A (accounting for 1% of the equity of Company A) from natural person shareholder B, which was acquired by B for 360,000 yuan when B increased its capital and shares, and transferred to A for 360,000 yuan**, and the share transfer ** was fair. In May 2017, A purchased 20,000 shares of Company A from the original shareholder C (accounting for 03333%), the shares were obtained by C with a capital increase of 20,000 yuan when company A was established (the subscription is the same as the paid-in amount), and transferred to A at a ** of 120,000 yuan. After the transfer of shares, C paid personal income tax of 19,988 yuan. For A, a total of 80,000 (6+2) shares were obtained from two natural person shareholders, B and C, and a total consideration of RMB 480,000 (36+12) was paid. Therefore, the total original value of these shares is 480,000 yuan.
It should be noted that there is a difference in the original value of the shares obtained by A from shareholders B and C - the 60,000 shares obtained from B are obtained by parity transfer, and only the transfer agreement and payment voucher are requiredThe 20,000 shares obtained from C are acquired at a premium, and C's individual income tax payment certificate is also required.
In the first equity distribution stage in June 2018, A received a total of 300,000 (12+8) 10 15 shares from Company A, and after the conversion of share capital, A held a total of 500,000 (12+8+30) shares of Company A. In May 2020, on the basis of the first conversion of share capital, Company A gave all shareholders 6 bonus shares for every 10 shares with undistributed profits, and A received a total of 300,000 (50 10 6) shares, and after the conversion of share capital, A obtained a total of 800,000 (50+30) shares. How to determine the original value of the 600,000 shares obtained by A's two equity distributions?
According to Article 2 of the Notice of the State Administration of Taxation on Further Strengthening the Collection and Administration of Individual Income Tax for High-income Earners (Guo Shui Fa 2010 No. 54), if the registered capital and share capital are increased by undistributed profits, surplus reserves and other capital reserves except for the issuance of ** premium, individual income tax shall be levied in accordance with the item of "interest, dividends and bonus income" in accordance with the current policy provisions.
In this case, Company A is a first-class enterprise from January 2018 to March 2023, and its dividend and dividend policy can be implemented in accordance with the notice of the Ministry of Finance, the State Administration of Taxation and the Securities Regulatory Commission on Issues Concerning the Differentiated Individual Income Tax Policy on Dividends and Dividends of Listed Companies (CS 2015 No. 101), that is, the listed company obtained by an individual from the public offering and transfer market** If the holding period is less than 1 month (including 1 month), the dividend income will be fully included in the taxable incomeIf the holding period is more than 1 month to 1 year (including 1 year), 50% of the shareholding period shall be temporarily reduced to the taxable income, and individual income tax shall be paid at the rate of 20%. If A holds the 600,000 shares for a period of more than one year before the transfer of equity in April 2023, the tax exemption provisions can be applied.
For the 600,000 shares acquired by A in the two equity distributions, according to Announcement No. 67, if the invested enterprise converts its capital reserve, surplus reserve and undistributed profits into share capital, and the individual shareholder has paid individual income tax in accordance with the law, the original value of the equity of the newly converted share capital shall be confirmed by the sum of the amount of the conversion and relevant taxes and fees. It should be noted that the premise of Announcement No. 67 is that individual shareholders have paid individual income tax in accordance with the law, but due to the application of the tax exemption policy, they will not actually pay individual income tax, so the original value of this part of the equity is 0 yuan (Longshang tax language thinks:This misunderstanding is wrong, the tax exemption is also tax exemption in accordance with the law, and the original value of this part of the equity should be 600,000 yuan. Since individuals are exempt from the tax exemption of buying and selling listed companies and *** companies from the secondary market, everyone generally does not pay attention to this cost issue, but it has a great impact on the original shareholders). When filing, A needs to provide information such as the resolution of the shareholders' meeting and relevant announcements on the distribution of relevant rights and interests.
In June and August 2020, the number of Company A from the secondary market was 1,000 shares and 11,000 shares respectively, and the unit price was 2$4. This 1The original value of 20,000 shares was 28,800 (1,000 2.).4+11000×2.$4. At the beginning of April 2023, A transferred all his shares to the major shareholder of Company A. According to Article 1 of the Notice of the State Administration of Taxation of the Ministry of Finance and the Securities Regulatory Commission on the Individual Transfer of Individual Income Tax Policies of Listed Companies Listed on the National Small and Medium-sized Enterprise Share Transfer System (CS 2018 No. 137), the income obtained by individuals from the transfer of non-original shares of the listed company (obtained by the individual after the listing of the listed company, as well as the gift and transfer of shares bred by the above-mentioned **) shall be temporarily exempted from individual income tax. Since Company A has terminated its listing in March 2023, A will transfer this 120,000 shares are not eligible for tax exemption and are subject to individual income tax (Longshang tax language thinks:: This is a place where the policy is not clear, and it should be controversial. The same is true for listed companies that are directly delisted (not continuing to trade in the stock transfer system), if they are listed companies when they buy shares, they will be tax-free when they sell them, but if they are directly delisted when they sell, it will inevitably be unreasonable. Of course, if you sell it after delisting, it is generally very low and will not make a profit).
Tax calculations
In summary, the total number of shares of Company A acquired by A at different stages is 8120,000 shares (12 + 8 + 60 + 0.)1+1.1), the total original value of equity is 122880,000 yuan (72+48+2.)88）。At the beginning of April 2023, when A transfers his shares to the major shareholders of Company A, the agreed transfer** is 1.5 million yuan (excluding VAT), and A must pay stamp duty of 375 yuan (1500000 0.).0005 50%), and the individual income tax to be paid is (1500000-1228800-375) 20%=54165 yuan.
Author's Affiliation:Beijing Xinshui Guangtong Tax Agent Office***
*: China Tax News, December 01, 2023, edition: 07