Research On Legal Problems Of Income Tax Of Stock Option In China

Abstract:As a long-term incentive system, Stock Options have spread to many countries and regions of the world in a few decades. After Stock Option entered China, because of the relevant income tax legal system is not sound, brings many legal problems on income tax, challenge the income tax legal system in China. On individual income tax law, there are many unreasonable respects, such as the type of the Stock Option, tax timing, the identification of income property, which impedes the development of Stock Option’s long-term incentives function. On the business income tax law, there is no clear regulation about whether Stock Option costs of enterprises could be deducted before taxes, causing the lack of legal provisions.Aiming at legal issues of Stock Option in China, use the successful experience of developed countries for reference, complete our country’s tax law system of Stock Option. In terms of individual income tax law, to promote long-term incentive function of Stock Option, encourage employees who participate in the plan to hold shares for a long time, classified Stock Option into Incentive Stock Option (ISO) and Nonqualified Stock Option (NSO) in the tax law, to give ISO more tax preferences, and give less tax preferences to NSO. Deferred tax of ISO, and give tax preferences to the staff who hold the stocks for a long time. Adjusting income properties of Stock Option, set up the capital gains tax, make the identification of income properties adapt to the development of Stock Option. In terms of business income tax law, allowing companies to deduct expenses of Stock Option before tax, make business income tax regulations according to the individual income tax regulations, and give more tax preferences to the companies encouraged by our country...