If a company's major shareholders reduce their holdings, they should pay personal income tax based on the income from property transfer, and a 20% tax rate is applicable. The company's major shareholders can reduce their holdings only if they meet certain conditions. By reducing their holdings, they can cash in and receive an income. Securities companies pay taxes on behalf of their clients. Currently, there are preferential policies for shareholders to reduce their holdings, and the actual payment ratio of shareholders is about 12%.

1. How to tax the reduction of holdings by the company's major shareholders? Personal income tax is levied at a proportional rate of 20% on the income obtained from the transfer of restricted shares by individuals in accordance with "property transfer income". For personal income tax on income from the transfer of restricted shares, the holder of restricted shares is the taxpayer, and the securities institution where the individual shareholder opens an account is the withholding agent. The individual income tax on restricted shares shall be collected and managed by the competent tax authority where the securities institution is located. After the personal income tax withheld by securities companies is paid to the tax deposit account of the local tax department within the specified time, according to relevant national regulations, the tax department must hand over 60% to the national treasury and retain 40% with the local finance. Rewards for reduction of restricted shares by natural person shareholders of listed companies will be cashed out within 7 working days after all taxes have been paid and deposited into the treasury (generally, tax declaration and liquidation must be carried out before the 15th of the month following the transaction). Taxable income = income from transfer of restricted shares - (original value of restricted shares + reasonable taxes). If the taxpayer fails to provide complete and authentic certificates of the original value of the restricted shares in a timely manner, the original value of the restricted shares and taxes will be determined based on 15% of the income from the transfer of the restricted shares.

2. Under what circumstances are shareholders and senior executives of a company not allowed to reduce their shareholdings? 1. Under any of the following circumstances, major shareholders of a listed company are not allowed to reduce their shareholdings: (1) The listed company or major shareholder is suspected of Securities and futures illegal crimes are being investigated by the China Securities Regulatory Commission or judicial authorities, and less than six months after the administrative penalty decision or criminal judgment is made. (2) The major shareholder has been publicly reprimanded by the stock exchange for less than three months for violating the self-discipline rules of the stock exchange. (3) Other circumstances specified by the China Securities Regulatory Commission. 2. Under any of the following circumstances, directors, supervisors and senior officers of listed companies shall not reduce their shareholdings: (1) Directors, supervisors and senior officers are suspected of securities and futures violations and are under investigation by the China Securities Regulatory Commission or judicial authorities, and during the administrative period Less than six months have passed since the decision on punishment or criminal judgment was made. (2) Directors, supervisors and senior executives have been publicly reprimanded by the stock exchange for less than three months for violating the self-discipline rules of the stock exchange. (3) Other circumstances specified by the China Securities Regulatory Commission. To sum up, major shareholders of a company often reduce their holdings of shares in order to cash out from the capital market. Shareholders who reduce their shareholdings are subject to personal income tax at a rate of 20%. In addition, according to the currently implemented tax incentives, shareholders who reduce their shareholdings can also receive incentives to offset their personal income tax payable. It should be noted here that the proportion of shareholders reducing their holdings must not exceed 10% of their shareholdings.