China Capital Gains Guide 2026

Overview — No Separate CGT

China does not have a standalone capital gains tax (CGT). Instead, capital gains are taxed under either the Individual Income Tax (IIT) or Enterprise Income Tax (EIT) framework. For individuals, the treatment depends on the type of asset and holding period. Gains from certain assets (e.g., property, equity transfers) are generally included in comprehensive income (taxed at progressive IIT rates of 3–45%) or taxed at a flat 20% rate on the net gain, depending on the specific rules. For corporates, all capital gains are included in ordinary taxable income at the standard EIT rate of 25% (or reduced rates as applicable). The distinction between short-term and long-term gains that exists in many other countries does not apply in China.

Equity Transfers — 20% Flat IIT

Gains from the transfer of equity (shares) in non-listed companies by individuals are taxed at a flat 20% IIT rate on the net gain (selling price minus original investment cost and reasonable expenses). The transfer must be reported to the tax bureau and tax paid before the equity transfer can be registered with the Administration for Market Regulation (AMR). The taxable gain is calculated as: transfer price − (original investment + reasonable expenses). If the transfer price is below the net asset value of the company, the tax bureau may adjust the price under transfer pricing or anti-avoidance rules. For listed shares (A-shares) traded on the Shanghai and Shenzhen stock exchanges, gains from the sale of shares by individuals are temporarily exempt from IIT (this exemption has been in place since 1994 and is periodically renewed). Gains on B-shares (foreign-invested) and H-shares (Hong Kong-listed) by individuals are also generally exempt for Chinese residents, though non-residents may face different treatment.

Property Gains — Included in IIT or 20% Separately

Gains from the sale of residential property by individuals are generally included in comprehensive income and taxed at progressive IIT rates (3–45%), unless a special 20% rate applies. In practice, the tax authority often levies a deemed 1% of the sale price (or the difference between sale and purchase price at 20%) for residential property sales when the seller cannot provide the original cost basis. Owner-occupied homes held for 5+ years and the only home of the seller (满五唯一) are exempt from IIT on the gain. Commercial property sales by individuals are taxed at 20% on the gain. For non-residents selling Chinese property, the gain is taxed at 20% IIT (or applicable treaty rate). Property developers and companies selling property include gains in EIT at 25% (or applicable rate).

Investment Income — Dividends, Interest, and Securities

Dividends from listed Chinese companies are taxed at 10% for individuals (half-rate preferential policy) if held for more than 1 month. Dividends from unlisted companies are taxed at 20%. Interest income from bank deposits is generally tax-exempt for individuals. Interest from bonds is taxed at 20% (though government bonds are often exempt). For corporate investors, dividends from other Chinese resident enterprises are generally exempt from EIT (subject to holding period and shareholding percentage requirements). Capital gains on securities trading (stocks, bonds, funds) by individuals are exempt from IIT for A-shares on the two main exchanges, though securities firms charge a small stamp duty (0.05% one-way on stock sales as of 2026). See our Investment Income Guide → for detailed rules.

Corporate Capital Gains

Companies include capital gains in their taxable income at the EIT rate of 25% (or reduced rate if applicable). There is no special CGT rate for corporates — gains on all assets (shares, property, intangibles) are included in ordinary income. However, gains on the transfer of shares held for 12+ months in another Chinese resident enterprise may qualify for tax exemption, subject to anti-avoidance rules. Losses on asset sales (capital losses) are generally deductible against ordinary income, which is more favourable than the ring-fencing rules in many other jurisdictions. The disposal of a Chinese subsidiary by a foreign parent company is subject to 10% withholding tax on the gain (treaty-reduced in some cases), in addition to the subsidiary-level EIT on any retained earnings distributed as dividends.

Anti-Avoidance and Reporting

China has robust anti-avoidance rules for capital gains. The STA may recharacterise the transfer price if it does not reflect market value (particularly for related-party transfers of shares or property). Indirect transfer rules (间接转让) target offshore transactions where a non-resident indirectly transfers Chinese assets through an offshore holding company — the STA may disregard the offshore intermediate company and treat the gain as China-sourced, subject to 10% withholding tax (or treaty rate). Reporting requirements: individuals must report significant capital gains in their annual IIT reconciliation; corporate capital gains are reported on the quarterly/annual EIT return; equity transfers must be registered with the AMR and tax bureau before the transfer is effective. Failure to report and pay capital gains tax can result in penalties of 50–200% of the underpaid tax plus daily late payment interest (0.05% per day).

FAQs

Do I pay capital gains tax on Chinese stocks?

No. Gains from the sale of A-shares on the Shanghai and Shenzhen stock exchanges by individuals are temporarily exempt from IIT. Stamp duty of 0.05% applies to the seller on the sale amount. This exemption has been in place since 1994 and is periodically renewed.

What is the tax on selling a residential apartment?

If you have owned the apartment for 5+ years and it is your only home (满五唯一), the gain is exempt from IIT. Otherwise, the gain is taxed at 20% on the net profit, or the tax authority may levy a deemed 1% of the sale price. Additionally, VAT at 5% applies if the property was held for less than 2 years (exempt after 2 years for residential property in most cities).

How are equity transfers taxed?

Individuals transferring shares in a non-listed Chinese company pay 20% IIT on the gain (proceeds minus cost basis). The tax must be paid before the equity transfer is registered with the AMR. Corporate equity transfers are included in the company's EIT return at 25%.

Can I offset capital losses against other income?

For individuals, capital losses from listed securities (A-shares) are not deductible (since gains are exempt, losses cannot be claimed). Capital losses from other assets (property, unlisted equity) can generally offset capital gains from the same category but cannot offset salary or business income. For companies, all gains and losses are included in ordinary taxable income, so capital losses effectively reduce EIT.

Disclaimer

This guide provides general information about capital gains taxation in China for 2026. Tax laws, rates, exemptions, and anti-avoidance rules are subject to change. The information is based on published STA regulations and may not reflect individual circumstances. Always consult with a qualified Chinese tax advisor for advice specific to your situation. InvestmentKit does not provide tax advice.