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"Super" tax incentives for qualified equity incentive plans and investments
        In the efforts to support the "Mass Entrepreneurship and Innovation" strategy and to promote structural transformation of the Chinese economies, the Chinese Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly released the Notice on Enhancement of the Income Tax Policies for Equity Incentives and Equity Investment with Technology (Technology Investments) (Caishui [2016] No.101, hereinafter referred to as "Circular 101") on 22 September 2016.

        The "super" tax incentives apply to qualified equity incentive plans of eligible non-listed companies. They not only defer the taxing point to the time of disposal of the shares acquired but also effectively reduce the maximum tax rate from 45% to 20%.

        In addition, Circular 101 further enhances the current favourable tax treatment for qualified equity incentive plans of eligible listed companies by extending the tax payments over a period of up to 12 months (from previously six months) for domestic listed companies. Circular 101 also offers tax deferral treatments for technology investments for domestic companies.

        Circular 101 received a warm welcome among entrepreneurs, venture capital and private equity markets. It is hailed as the most favourable income tax policy on equity incentive plans ever. Circular 101 has already taken effect from 1 September 2016.