Tax on selling locked-up shares
By Winny Wang |
January 1, 2010, Friday
|
Print Edition
Print Edition
China will begin levying from today a 20-percent personal income tax on founding individual investors who make a profit from selling their locked-up shares as it seeks to promote a healthy development of its capital industry, the State Council, China's Cabinet, said yesterday.
The 20-percent tax move is also to adjust the taxation arrangement for wealthy people, the central government said.
But individual investors who profit from selling their publicly-traded stocks will continue to be exempt from having to pay personal income tax as part of efforts to boost trading.
"It's a positive signal for the stock market because founding investors will be reluctant to sell off their locked-up holdings," said Lin Feng, an analyst at Aerospace Securities Co. "The move indirectly restricts investors from selling off 5.84 trillion yuan (US$855 billion) worth of shares when their lock-up period expires in 2010."
The lock-up period of 383 billion shares in 688 companies listed on the Chinese mainland will expire this year, and they were worth 5.84 trillion yuan based on their closing prices on Monday, Wind Information said. The value grew 11 percent from last year's 5.24 trillion yuan and accounted for 41.1 percent of tradable market value of the A-share market.
The 20-percent tax move is also to adjust the taxation arrangement for wealthy people, the central government said.
But individual investors who profit from selling their publicly-traded stocks will continue to be exempt from having to pay personal income tax as part of efforts to boost trading.
"It's a positive signal for the stock market because founding investors will be reluctant to sell off their locked-up holdings," said Lin Feng, an analyst at Aerospace Securities Co. "The move indirectly restricts investors from selling off 5.84 trillion yuan (US$855 billion) worth of shares when their lock-up period expires in 2010."
The lock-up period of 383 billion shares in 688 companies listed on the Chinese mainland will expire this year, and they were worth 5.84 trillion yuan based on their closing prices on Monday, Wind Information said. The value grew 11 percent from last year's 5.24 trillion yuan and accounted for 41.1 percent of tradable market value of the A-share market.
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