The preferential individual income (IIT) policies for income derived from participation in employee share plans has been extended by one year.

What do these changes mean?

In late December 2021, PRC Ministry of Finance (MOF) and the State Taxation Administration (STA) announced the decision to extend the preferential IIT policies for income derived from employee share plans under Notice [2021] No. 42:

  • The IIT policy to separate the tax calculation for equity incentives listed companies to their resident employees will be extended until 31 December 2022. In another words, all incomes derived from employee share plan before 31 December 2022 will continue enjoying the preferential tax treatment, and will not be calculated as part of the comprehensive income of the year.
  • The IIT policy to tax annual bonus derived by resident taxpayers separately from their current year’s comprehensive income will be extended until 31 December 2023. For many employees, this means they may pay less tax for the year-end bonus, reducing their tax burden.

As many employees in China benefit from the preferential IIT policies relating to equity incentives, this is positive news for our clients and their employees.

What companies need to do

Given the preferential IIT treatment on share incentive incomes will now be extended to expire on 31 Dec 2022, there is no immediate action for the companies.

How Computershare will support our clients

As your trusted partner for employee share plans, Computershare will keep you posted on any share plan related regulatory updates and support your company in meeting the required obligations.

If you have any questions or need assistance, please reach out to your Computershare Relationship Manager.

Computershare Plan Managers provides equity plan services to over 250 clients and 500,000 participants across Asia. We have the global expertise and local knowledge to partner with companies to help them create high performing cultures and drive their businesses forward, with confidence.