If the income from equity transfer declared without justifiable reasons is obviously low, the competent tax authorities may verify the income from equity transfer.
In any of the following circumstances, it is deemed that the income from equity transfer is obviously low:
(1) The declared equity transfer income is lower than the share of net assets corresponding to the equity.
Among them, the invested enterprise owns land use rights, houses, unsold real estate, intellectual property rights, exploration rights, mining rights, equity and other assets, and the declared equity transfer income is lower than the fair value share of the net assets corresponding to the equity;
(2) The declared income from equity transfer is lower than the initial investment cost or the price paid for acquiring equity and related taxes;
(3) The declared income of equity transfer is lower than that of the same shareholder or other shareholders of the same enterprise under the same or similar conditions;
(4) The declared income from equity transfer is lower than that of enterprises under the same or similar conditions in the same industry;
(five) unreasonable free transfer of equity or shares;
(six) other circumstances identified by the competent tax authorities.
The income from equity transfer that meets one of the following conditions is obviously low, which is considered reasonable:
(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) Inherit or transfer the equity to the spouse, parents, children, grandparents, grandchildren, grandchildren, brothers and sisters who can provide legal and valid identity certificates, and the dependents or supporters who have direct support or support obligations to the transferor;
(3) Internal transfer of non-transferable shares held by employees of the enterprise as stipulated in relevant laws, government documents or articles of association, and there are relevant materials that fully prove that the transfer price is reasonable and true;
(4) Other reasonable circumstances in which both parties to the equity transfer can provide effective evidence to prove its rationality.
Basis: Individual Income Tax Law of People's Republic of China (PRC) (the second amendment of the 11th session of the Ninth NPC Standing Committee),
Announcement of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Issuing 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 +2065438).