Foreign asset managers who profited from China’s equity market between 2009 and 2014 are facing substantial tax bills estimated worth a combined US$4 billion and managers that haven’t prepared enough provisions or protected by tax treaties may be forced to sell holdings to pay the taxman.
A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.
For equities, an example of a popular and liquid asset, national and state legislation often has a large array of fiscal obligations that must be respected regarding capital gains. Taxes are charged by the state over the transactions, dividends and capital gains on the stock market. However, these fiscal obligations may vary from jurisdiction to jurisdiction.