China: Tax relief, Shenzhen-Hong Kong Stock Connect | KPMG | GLOBAL

China: Transaction tax relief, Shenzhen-Hong Kong Stock Connect

China: Tax relief, Shenzhen-Hong Kong Stock Connect

Guidance issued by the authorities in China is intended to clarify preferential tax treatment available with respect to certain share trades on the Shenzhen-Hong Kong Stock Connect.

1000

Related content

The Shenzhen-Hong Kong Stock Connect cross-border share trading mechanism began operations in early December 2016. This system complements the Shanghai-Hong Kong Stock Connect mechanism (as in place since November 2014), and enables international investors to trade selected A-shares, listed on the Shenzhen Stock Exchange via the Hong Kong Stock Exchange, as well as similar treatment for qualified mainland investors trading on the exchanges.

To facilitate cross-border investment activity, and in a manner similar to the system established for the Shanghai-Hong Kong Stock Connect, preferential Chinese tax treatment was clarified when China’s Ministry of Finance, State Administration of Taxation, and China Securities Regulatory Commission jointly issued Circular 127 (November 2016) with respect to the temporary exemptions from Chinese income taxes and value added tax (VAT) for trading gains arising to foreign investors on Shenzhen Stock Exchange-listed shares, when transacted through Shenzhen-Hong Kong Stock Connect. 

Conversely, temporary income tax and VAT exemptions are also provided for the trading gains of Chinese investors arising from Hong Kong Stock Exchange-listed shares, when transacted through Shenzhen-Hong Kong Stock Connect. 

 

Read a January 2017 report prepared by the KPMG member firm in China: Shenzhen-Hong Kong Stock Connect – Transaction tax treatment clarified

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit