Short Term Capital Gains Tax In China?

[RichardC]

I make my living day trading US stocks and am interested in moving to China. I have been trying to find information about the short term rate of capital gains tax in China but articles vary wildly in the figures they quote for capital gains tax. Wikipedia says 10% with equities exempt

This says 20%. This says 4.66%. Various other articles give different values.

Does anybody know where I can get accurate information on what the short term rate of capital gains tax would be on profits made from day trading US stocks?

Thanks for any help you can offer.

[roddy]

To be honest you probably need an accountant. However, according to the pdf available here there isn't actually a capital gains tax as such, and according to this there aren't any plans for one. So what you seem to have is not a capital gains tax issue, but an income tax issue. There's some info in the pdf about that also, let us know when you've figured it out

Edited November 8, 2008 at 06:18 AM by roddy

[imron]

If you are trading everything online, buying/selling US stocks, using a US bank and a US brokerage account, then even if you are physically in China, I can't see why or how the Chinese government would know, care or even have the jurisdiction to tax you. The US government would still want its share however, regardless of where you lived.

[BrandeX]

The that would equate "earning income" in China, and require a work permit/Z visa, no? Regardless, I concur with how Imron put it, unles you are somehow phyically day trading B shares here on the mainland using Chinese accounts, which I am not sure is possible to do as "day trading" as a foreigner?

[RichardC]

Thanks for the replies. I'm still not entirely sure but it looks like gains would be taxed as income at 33%. While not declaring the gains would be an option I suspect it would be very hard to get a visa without a declared from of income.

It looks like I'll have to rule China out go for Hong Kong where there definitely is no taxes applied to capital gains on the sale of equities.

[fanglu]

While not declaring the gains would be an option I suspect it would be very hard to get a visa without a declared from of income.

To be honest I think it would be impossible to get a working visa for either China or Hong Kong in this situation since you need a company to sponsor you.

Of course on a tourist visa there's no need, and there's no way for the Chinese tax or immigration authorities are going to figure out you're doing internet share trading using an American bank account. The problem would be the constant organising new visas.

You could always get a student visa, but it would involve at least paying for (and probably attending) classes.

It looks like I'll have to rule China out go for Hong Kong where there definitely is no taxes applied to capital gains on the sale of equities.

If you're really that worried about 'doing it properly' (setting up a bank account, broker etc in your destination) you should probably check that under the tax law of the place you're going day trading of stocks is classed as capital gains. In Australia for example it would be taxed as income, not capital gains.

[imron]

I suspect it would be very hard to get a visa without a declared from of income.

I suspect it will be difficult to get anything other than a tourist visa or a visiting visa whatever happens unless you a) are going to be employed by a company here or B) are going to study here - which it sounds like you don't plan on doing. Whatever happens, none of the above conditions have anything to do with your tradings on the US stock market.

[RichardC]

I hadn't really looked into the requirements for Visas in China but Hong Kong has a Quality Migrant Admission Scheme which I meet the required points total for. I was hoping to get in on that. My broker already has a branch in Hong Kong so this may aid in income/balance so I may as well give it a try.

[roddy]

that would equate "earning income" in China, and require a work permit/Z visa, no?

If you wanted to go that route, you'd basically need to set up your own company so you could employ yourself. And even then - Chinese individuals can't trade on foreign stock exchanges, can Chinese companies?

If you were to want to do this, by far the easiest route would be to sort out a visa somehow - a twelve hour a week teaching job, six month F visa from an agency in Beijing, study at a cheap school, get married - and just get on with it. I don't think managing your own investments could be classed as employment - who employs you? - and you have no China income arising. It's more akin to rental or royalty income. As a day trader you'd be doing more 'work' than most investors on a day to day basis, but I don't see that being relevant.