According to the provisions of Article 1 of the "Notice of the Ministry of Finance and the State Administration of Taxation on Personal Income Tax Policies on Individual Non-monetary Asset Investment" (Caishui [2015] No. 41), individuals investing in non-monetary assets, The transfer of non-monetary assets and investments by individuals occurs at the same time. For individuals’ income from the transfer of non-monetary assets, personal income tax should be calculated and paid in accordance with the "Income from Property Transfer" item in accordance with the law.
"The Ministry of Finance and the State Administration of Taxation's Income Tax Policies on Improving Equity Incentives and Technology Shareholdings" Article 3 of the "Notice of Finance and Taxation [2016] No. 101" stipulates that starting from September 1, 2016, if an individual invests in a domestic resident enterprise with technological achievements and the consideration paid by the invested enterprise is all stocks (rights), Individuals can choose to continue to follow the current relevant tax policies, or they can choose to apply the preferential tax deferred policy for investment in technological achievements. After filing with the competent tax authorities, tax payment for the current period of investment and investment is allowed to be deferred. When the equity is transferred, income tax is calculated and paid based on the difference between the equity transfer income minus the original value of the technical achievements and reasonable taxes and fees.
Technical achievements refer to patented technologies (including national defense patents), computer software copyrights, and integrations. Exclusive rights to circuit layout design, new plant variety rights, new biomedical varieties, and other technological achievements determined by the Ministry of Science and Technology, the Ministry of Finance, and the State Administration of Taxation. Investment in technological achievements refers to the transfer of ownership of technological achievements by taxpayers. The act of acquiring shares (rights) of an invested enterprise.
Therefore, individuals who invest in enterprises with patent rights should pay personal income tax as “income from property transfer” before September 1, 2016. Personal income tax for the current period should be calculated and paid in accordance with the law according to the "property transfer income" item; starting from September 1, 2016, after filing with the competent tax authority, investment in shares can be temporarily exempt from tax for the current period, and is allowed to be deferred until the equity is transferred. Income tax is calculated on the difference between the transfer income and the original value of the technological achievements and reasonable taxes.