China gives tax breaks on Shenzhen-HK stock link

Profits made by individual investors from the link between the Shenzhen and Hong Kong stock exchanges will be temporarily exempted from personal income tax, the finance ministry said Thursday.

Individual mainland investors buying shares in Hong Kong through the program will be exempt from personal income tax on profits for three years, but will still be liable for tax on dividends, according to a Ministry of Finance statement.

Mainland companies buying shares in Hong Kong still pay corporate income tax, the statement added.

The Shenzhen-Hong Kong Stock Connect allows mainland and Hong Kong investors to buy shares on each other's market. The trading will start on Dec. 5.

Individuals and companies in Hong Kong buying shares in Shenzhen will be temporarily exempted from paying income tax on gains for an unspecified period, according to the statement.

The taxation policy is similar to that for the link between Shanghai and Hong Kong stock exchanges, which has been running for two years.