China scraps dividend tax for long-term investors

A man checks share prices on his mobile phone while waiting for his coffee at a Starbucks branch in Beijing July 16, 2015.[Photo/Agencies]

BEIJING - Chinese investors holding a stock for more than one year will be exempted from a 5-percent dividend tax from Tuesday, authorities said.

Those who have held a stock for one month or less will have to pay 20 percent of the dividend they receive as income tax when they sell the stock, the Ministry of Finance said Monday in a statement jointly released with the country's taxation authority and the securities regulator.

People who have held a stock for over one month to one year will have to pay a 10 percent dividend tax when they sell the stock, the statement said.

This move is part of the government's efforts to promote long-term investment following a stock market rout since mid-June.

The Shanghai Composite has plunged more than 40 percent from a peak seen on June 12.