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Taxation of stock options

This paper from China Union [link widoczny dla zalogowanych] collected. Classic Harvard Management told us to be successful in the market, companies have two common characteristics: (1) Senior managers have long-term strategic vision; (2) top management team is stable. How to achieve these two objectives has been the management and actively explore a major issue. In recent years, as the representative of the United States, Western countries have found an effective solution - stock options. As the internal logic of incentive stock options is to add value through stock option holders to promote more concerned about the company's long-term development, so that the option holder's long-term economic returns and long-term growth of the company to maintain a close contact, so that they willingly To complete the company's long-term strategic goal. According to statistics, in the China's reform and opening up,[link widoczny dla zalogowanych], the state-owned enterprise managers to mobilize the enthusiasm and creativity of the income distribution system operators have conducted a number of exploration and adjustment, but whether the original contract system was introduced after the 1994 annual salary system, are not effectively the interests of the operators and the really long-term business interests tied to the operators of the problem of short-term business objectives remain, incentive effects are not obvious. The successful experience of the United States and the domestic conditions to promote maturation of the stock options that we have begun to explore the system.
One mode of operation of stock options and Practice in China
Option plan for the implementation of more successful and widespread the United States, the provisions of the Option Scheme is usually given to company Chief Executive Officer (CEO), led by managers at a future period, with a fixed exercise price the right to purchase ordinary shares. Exercise price and the difference between the stock sale price is the option owner's income. The option is not transferable, but the option holder can decide on when to sell the shares acquired on exercise of options. Exercise price of incentive options,[link widoczny dla zalogowanych], stock option grant date can not be less than the fair market price. In general, the executive stock options are granted free of charge, the company hopes to effective business managers to improve stock prices,[link widoczny dla zalogowanych], so that the operator gains. And some companies require managers to obtain executive stock options at the time to pay a premium, but this option plan is mainly to increase the binding, because the option itself is an option, when the company's share price below the exercise price, the Option holders may give up, so that greatly reduced the incentive options, and the payment of the premium increases the opportunity cost of lazy managers. As long as the current stock price and the difference between the exercise price of not more than option fee, the incentive is still valid.
Present, Managerial Ownership in China has been more and more attention. In some private enterprises, high-tech enterprises and state-owned or state holding enterprises, this arrangement is quite common, especially in the upcoming GEM of more stock ownership plan of arrangement provided an opportunity for managers. Can be expected, the implementation of enterprise project managers will be holding more and more personal income distribution in China will lead to a big revolution. This also other related areas will put forward many new challenges, such as the tax on stock options is determined a new area of research. The nature of the proceeds of stock options how to recognize? How the tax rules? Is worthy of our prospective study of a major issue.
Parts for domestic and business is currently implemented as far as the stock market and the ownership structure of the specificity, the implementation is not operating according to international practice is the executive stock option system,[link widoczny dla zalogowanych], but a bonus or salary compensation alternative forms. For instance, Shanghai Electronics Development Holding Group, a listed company in its holding in Shanghai Jinling Co., Ltd. practices in the implementation of the manager is very simple ownership, the first in the market to buy some shares, hanging in a natural name, and then used by the managers money to buy. The personal income tax on the shares should only be determined based on the amount of his bonus income, and managers to buy shares after the value of income should be removed out. The most critical issue is the second board market after the Second Board listed companies according to international practices introduced Option Tax on how to identify and, according to tax.
Second, the U.S. income tax provision of options
In the United States, according to whether the One incentive is the most common form of option, you can enjoy tax concessions under the tax law. If employees receive options and the implementation of an option, not to be identified to get as
Been identified as incentive options, tax laws must be consistent with the provisions of article 422: (1) Options granted to employees only, and these options can only be used to purchase the company or the parent, under the company's stock, (2) Options granted must comply with the written document approved by the shareholders; (3) The adoption or approval by the shareholders, options must be granted within 10 years, must be 10 years after the grant implementation; (4) The exercise price must be equal to or higher than the fair market price when granted, if the stock is not publicly traded, the price should be determined in a reasonable manner; (5) grant, the employee can not hold more than 10% of the shares of the company, unless the option price open market price is set at more than 110%, or 5 years after the grant can not be executed.
Third, China's stock options Tax Thoughts
From our current pilot run view of the nature of stock options, most not in the strict sense of the stock options, is actually an extension of the annual salary system, income from a tax point of view of nature found, not complicated. But China's securities market is about to launch second board, second board listed companies in the vast majority of private, high-tech enterprises,[link widoczny dla zalogowanych], these enterprises to develop and grow, many will operate according to international practices introduced stock option system. Therefore, with the second board that produced the design in accordance with international common practice of stock options, how do we identify from the Tax and a tax on the legislation, it is very urgent.
From the whole process of stock options granted to view, stock options can be granted to the line from the realization of rights and interests of the whole process is divided into two stages: one is to obtain options and implementation options stage, the other option which is sold by the income shares to obtain access to the stage of the post.