Study Of The Tax Issues In Personal Equity Transfer

Equity transaction frequently occurs during economic transition and enterprise reshuffle. Individual behaviors of equity transaction became the emphasis of tax inspection in recent years, for involving relatively more cryptic tax information and larger amounts. In this article, Personal Equity Transfer subscribed from the "S limited company" ("S company" or "company" for short) is applied. For this case, applicable tax policies were studied, taxes paying behaviors were evaluated and optimizing advices were provided for existing problems. It is expected that tax-paying advices could be provided to enterprises involving individual equity transfer and accumulation fund turning to increase subscribed.The type of this study is case analysis. Starting with the case of equity transaction between individual stockholders in S company, the behaviors of equity transfer and accumulation fund turning to increase subscribed were analyzed by economic research methods including qualitative research and logical reasoning, with S company as the subject and the view of individual stockholders. In terms of individual behaviors of equity transfer, the time of tax liability arising and the tax amount was mainly discussed in this article, based on carding the evolution of the tax policies regarding the equity transfer between individual stockholders. In terms of the behavior that turning accumulated surpluses into personal equity, applicable policies for this case were analyzed.Final conclusions have been reached through above discussions. First, before an equity transfer agreement was signed, enterprises should communicate with the tax authority to know possible tax types and amounts after equity restructuring. Second, there should not be equity transfer clauses on the condition of cash or non-cash funds communication in an equity transfer agreement in order to prevent tax authority from affirming the paid or partly paid equity transfer cost. Agreements which claim equity transferring by stages should state the time of each stage. If clear times were not given, the overall time should be shortened. Third, the process of tax-paying application should be made clear by in-time communicating with the taxation administrations in-charge. Individuals who transfer equity by stages should make tax declaration after every time they pay transfer fees, and should make the intervals among equity transfers as short as possible in order to assure continuity of the policy applying. Fourth, individuals who turn accumulated surpluses into personal equity after transferred 100% enterprise equity by stages do not apply to No. 23 announcements of the State Administration of Taxation in 2013. Fifth, enterprises or individuals should make tax declaration initiatively after equity transaction occurs.