Contractual private equity funds are not taxpayers themselves. The contract is actually financial management for customers, that is, trust. The trustee is not the real owner of the property, but the real owner of the property is the beneficiary. From abroad, only the beneficiary pays tax, but the trustee is exempt from tax.
At present, China's tax policy on trust is only a pilot tax policy for securitization of bank credit assets. When the trust company's expected annualized expected income is distributed to investors in the current year, enterprise income tax is not levied on the trust link.
The following is a list of taxes and tax laws for contractual private equity funds:
1. Trust fund tax
Contract funds do not need to pay income tax. Income tax is paid by beneficiaries, thus avoiding the problem of double taxation.
2. Taxation at the investor level of trust funds.
As a trust fund investor, a natural person shall pay personal income tax. As for institutions as contractual fund investors, they are treated separately according to their income tax rates: if the income tax rate of institutional investors is lower than or equal to the fund tax rate, there is no need to pay taxes; If the institutional investor tax rate is higher than the fund tax rate, it is necessary to pay back the income tax.
3. Tax incentives
China's preferential treatment for private equity investment funds is limited to enterprise funds, and trust funds cannot enjoy tax incentives.