In China, listed companies implementing equity based incentive plans are required to register the plan with the in-charge local tax bureau. This requirement was first introduced in 2005 by Cai Shui  No. 35 (Circular 35) and was reiterated in Guo Shui Han  No. 461 (Circular 461). Over the years, the enforcement and implementation of this requirement has varied from one location to the other. In recent months, we have observed that many local tax bureaus have started to tighten the tax registration requirements and related tax compliance administration concerning equity based income.
In this alert, we share some latest developments in this area so that companies can take necessary steps to mitigate their exposures.