China will
waive capital-gains taxes for foreign stock investors using the Shanghai-Hong Kong (HSCEI) bourse link,
clarifying its rules three days before the program’s debut provides
unprecedented access to mainland shares.
Institutions already
investing in Chinese markets through the so-called QFII and RQFII programs will
also get a “temporary” tax waiver starting Nov. 17, the Ministry of Finance
said in a statement today, without giving a time frame for the exemption.
Chinese individuals who buy Hong
Kong equities through the link get a three-year exemption,
while mainland companies using the connect will be charged tax.
International money
managers have been seeking to resolve confusion over the tax
policy before the bourse link gives them a new route to
access China’s $4.2 trillion stock market. MSCI Inc., which kept mainland shares out
of its global indexes in June, said the lack of clarity was one of investors’
biggest concerns.
“It’s positive news for
the market and foreign investors,” Zhang
Gang, a strategist at Central China Securities Co. in Shanghai,
said by phone. “The stock connect can start in a stable manner on Monday.”
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