The partners shall pay personal income tax respectively on the transfer of equity in a partnership enterprise.

As of February 2019, the "Notice of the State Administration of Taxation on Effectively Strengthening the Collection and Administration of Personal Income Tax for High-Income Individuals" stipulates:

For sole proprietorships and partnerships engaged in equity (votes) Income from transactions in , futures, funds, bonds, foreign exchange, precious metals, resource mining rights and other investment products shall all be included in income from production and operation, and personal income tax shall be levied in accordance with the law.

The "Notice of the Ministry of Finance and the State Administration of Taxation on Issuing Regulations on the Collection of Individual Income Tax for Investors" stipulates:

Every tax year for sole proprietorships and partnerships (hereinafter referred to as enterprises) The balance of the total income after deducting costs, expenses and losses is regarded as the investor's personal production and operation income. According to the taxable item of "Individual Industrial and Commercial Households' Production and Operation Income" in the Personal Income Tax Law, five levels of 5% to 35% are applicable. Excess progressive tax rates are calculated and levied on personal income taxes. ?

According to the provisions of the above documents, it can be determined that the equity transfer income of a partnership enterprise belongs to the production and operation income of the partnership enterprise. According to the principle of "dividing first and taxing later", the production and operation income of the partnership enterprise shall be adopted.

For individual investors, according to the taxable items of "Income from production and operation of individual industrial and commercial households" in the Personal Income Tax Law, a five-level excess progressive tax rate of 5% to 35% is applied to calculate and collect personal income tax; for legal persons Corporate investors shall pay corporate income tax at the applicable tax rate.

Extended information

How to pay tax on dividend income from a partnership.

According to the "Notice of the State Administration of Taxation on the Implementation Criteria of Regulations on the Imposition of Personal Income Tax on Investors of Sole Proprietorships and Partnership Enterprises":

Regarding the foreign investment of sole proprietorships and partnerships Issues on the taxation of interest, dividends and dividends distributed by sole proprietorships and partnerships The interest, dividends and bonuses distributed by sole proprietorships and partnerships shall not be incorporated into the income of the enterprise, but shall be treated separately as the interest, dividends and bonus income obtained by the individual investors. , personal income tax is calculated and paid according to the taxable items of interest, dividends, and dividends.?

If interest, dividends, and bonuses are distributed from external investments in the name of a partnership enterprise, the individual income tax shall be calculated and paid according to the provisions of the "Notice" attached. The spirit of the five articles determines that the interest, dividends, and bonus income of each investor shall be calculated and paid individual income tax according to the taxable items of "interest, dividends, and bonus income".

According to the "Individual Income Tax of the People's Republic of China". Paragraph 5 of Article 3 of the Income Tax Law stipulates:

Proportional tax rates shall apply to income from royalties, income from interest, dividends, bonuses, income from property leasing, income from property transfer, incidental income and other income. is twenty percent.

Therefore, when a natural person holds shares through a partnership, the applicable personal income tax rate for dividends received from the companies invested by the partnership is 20%.