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China mulls over differential stock dividends tax

(Xinhua)

08:25, October 30, 2012

BEIJING, Oct. 29 (Xinhua) -- Security authorities in China are studying policies to reduce taxes on stock dividends for long-term investors in a latest move to boost the country's depressed capital market.

The policy will impose different tax rates on dividends distributed by listed companies to individual investors in accordance with investors' shareholding period, Shanghai Securities News reported on Monday.

The holding period will be divided into three phases -- less than one month, one month to a year, and more than one year, according to the policy.

Investors holding shares for less than a month will have to pay the legal rate, while those owning shares for more than a year will enjoy a favorable rate.

The move comes seven years after the government collected half of the legal tax rate on stock dividends for individual investors in 2005.

The policy, which marks the fourth such cut this year, will help curb excessive speculation, boost value investment, and highlight blue-chip stocks which usually pay high dividends to their investors, the report quoted analysts as saying.

"It will guide investors to make long-term investment in blue chip stocks which are currently undervalued," said Dong Dengxin, a financial and securities researcher at Wuhan University of Science and Technology.

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