China lifts dividend tax on long term investors in bid to stabiise market

BEIJING - China’s Ministry of Finance announced yesterday that Chinese investors holding a stock for more than one year will now be exempted from a 5% dividend tax; additionally, those who have held a stock for one month or less will have to pay 20% of the dividend they receive as income tax when they sell.

According to the statement, which was jointly released by the MOF and the country’s taxation and securities authorities, those who have held onto a stock for more than one month to one year will have to pay a 10% dividend tax when they sell.

The move, on behalf of China’s financial regulators, is the latest attempt to promote long-term investment following numerous hiccups in China’s stock market this summer. The Shanghai Composite has plunged more than 40% from its last peak on June 12.

Over the weekend, China’s securities watchdog announced that it is drafting a plan to implement a circuit-breaker mechanism that would temporarily suspend trading in stock exchanges to avert any panic selling after the stock index has fallen by a certain percentage. www.webershandwik.cn (ATI).