China Makes Changes To Its Dividends Tax

By: Ainsley Brown

As of the 1st of January 2013 the rate of withholding tax on dividends will vary depending on the length of time the stock is held by the investor.

In a move to further encourage the development of China’s stock markets and long term investment, the government in this move is trying to discouraging something that has plagued western markets –   short term speculation.

China’s Ministry of Finance, after approval from the State Council, has announced that as of next year investors will pay less tax on dividends the longer they hold on to their stock. The withholding tax on dividends on shares held for more than one year will be 5%; those held for one month to a year at 10% and those held for less than one month shall attract a tax rate of 20%.

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