On 17 January 2019, the Chinese Ministry of Finance and State Administration of Taxation jointly issued a circular Cai Shui (2019) No.13 that sets out the new preferential tax policy available to qualified SMEs for the period from 1 January 2019 to 31 December 2021. The salient points of the new policy are as follows:
In order to promote Hong Kong as an international research & development (R&D) hub and attract more R&D activities to be performed in Hong Kong, the Hong Kong government has recently enacted new tax regulations which provide tax incentives to qualifying R&D expenditures incurred on or after 1 April 2018.
Employee Share Option Plan (ESOP) refers to the mechanism by which a company (which can be either private or listed) offers to one of more employee(s) the right to buy a specific number (or a specific percentage) of shares in the company, at a specific price (the exercise price) and during a specified period, usually within a number of years (the exercise period).
During such exercise period, the employee is free to exercise or not such option at a price which is determined by the company at the time of the grant. This is an option given to the employee, not an obligation.