New tax reporting requirements for employee share plans

On 12 October 2021, the State Tax Administration (STA) released the Notice to Further Deepen the Reforms of "Decentralization, Administration, and Service" in the Taxation Field, Cultivate and Stimulate the Vigor of Market Entities (Notice [2021] No.69).

All companies that have employee share plans in China are required to submit The Reporting Form on Equity Incentive Situation to the tax authorities, which can be found here.

What companies need to do

• Companies that are about to implement an employee share plan will need to complete and submit a Reporting Form on Equity Incentive Situation and provide supporting documents to the tax authority within the first 15 days of the month following the decision to implement the share plan.
• Companies who have an active employee share plan are required to submit the Reporting Form to the tax authority in charge by 31 December 2021.
• Companies listed offshore, with employee share plans in China must also follow the above requirements. The domestic entity is responsible for submitting the form. They must also withhold the Individual Income Tax (IIT) on the income that the employees derive from the share plan as the income will be taxed as the employee’s wages and salary.

How Computershare can support you

Computershare is the leading provider of employee share plans in Asia. Contact us at HKPlanManagers@computershare.com.au for assistance in communicating with tax authorities and meeting your filing obligations.