According to the Notice of the Ministry of Finance on the Collection of Individual Income Tax on Income from Individual Stock Options in State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) (Caishui [2005] No.35), when employees exercise their rights, the difference between the actual purchase price (grant price) of the shares they obtained from the enterprise and the fair market price on the purchase day (referring to the closing price of the shares on that day) is the income related to their positions and employment due to their performance and performance in the enterprise, which should be based on wages and salaries. For employees who transfer stock options before the exercise date due to special circumstances, the taxable income of wages and salaries obtained in the form of stock options shall be calculated according to the following formula: the taxable income of wages and salaries obtained in the form of stock options = (the market price per share of exercised shares-the exercise price per share paid by employees for obtaining stock options) × the number of shares.