According to the Measures for the Administration of Individual Income Tax on Equity Transfer (Trial) (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.67,2014), if the spouse, parents, children, grandparents, grandchildren, brothers and sisters who can provide legal identification, and the dependents who have direct support or maintenance obligations to the transferor have justified reasons to inherit or transfer the equity, it is obvious that the income from equity transfer is low.
Generally speaking, the normal equity transfer needs to pay 20% personal income tax. But we can reduce personal tax expenditure through reasonable planning, which is also called reasonable tax avoidance.
According to the Provisions on the Collection of Individual Income Tax on the Transfer of Shares Held by Individuals, if one of the following conditions is met, the transfer may be lower than the reasonable value of the shares.
1. Can produce valid documents to prove that the production and operation of the invested enterprise have been greatly affected by the adjustment of national policies, resulting in the low-cost transfer of equity.
2. The internal transfer of the non-transferable shares held by the employees of this enterprise at a reasonable and true price as stipulated in relevant laws, government documents or articles of association and fully proved by relevant information.
3. Other reasonable circumstances in which both parties to the equity transfer can provide valid evidence to prove its rationality.