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Legal update
Shanghai Issued Pilot Preferential Policy for VC Firms on Corporate Income Tax
Pubdate：2022.01.25
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Hit：1105
On November 2, 2021, government authorities jointly issued the "Notice on Pilot Preferential Policy for Venture Capital Firms on Corporate Income Tax" (“Notice”). The Notice will be implemented on January 1, 2022.
The Notice explicit that for the incorporated VC firms in specific area of Pudong New Area, if the income from the transfer of equity holdings for more than 3 years accounts for more than 50% of the total annual equity transfer income, the corporate income tax of the year shall be halved according to the proportion of individual shareholders holdings at the end of the year. If the income from the transfer of equity held for more than 5 years accounts for more than 50% of the total annual equity transfer income, the corporate income tax of the year shall be exempted according to the proportion of individual shareholders holding the shares at the end of the year. Dividends received by individual shareholders from corporate venture capital enterprises shall be subject to individual income tax in accordance with regulations.
