China Seen Cutting Taxes On Senior Executives - Report

Tom Burroughes

3 July 2017

Chinese authorities are expected to introduce tax reliefs for top executives as a way of helping firms and start-up enterprises to retain talent, according to the South China Morning Post.

The top rate of personal tax in China is 45 per cent, compared with 17 per cent in Hong Kong and 20 per cent in Singapore. The mainland adopts a seven-bracket progressive personal income tax regime, and the expected new tax breaks are expected to ease the burden on the top 45 per cent earners, who could conceivably be tempted elsewhere to tax rates regimes, the SCMP said.

In 2016, the government cut taxes on equity-based incentive plans, such as stock options, at non-listed companies. Today, taxes only apply when a holding is cashed in.

The publication also said that qualified executives can also apply a flat tax rate of 20 per cent on gains from equity incentives because the income they earn is classified as capital gains, not salary.