In order to support the transfer and enrichment of state-owned equity and cash income operation management of social security funds, the Ministry of Finance and the State Administration of Taxation issued the "Notice on Tax Policies for the Transfer and Enrichment of State owned Equity and Cash Income Operation Management of Social Security Funds" (hereinafter referred to as the "Notice") on September 2, clarifying relevant tax policies. The Notice specifies that all interest and interest related income obtained from loan services and financial product transfer income during the use of transferred state-owned equity and cash income investment by the undertaking entity shall be exempt from value-added tax. According to the Notice of the State Council on Issuing the Implementation Plan for the Transfer of Part of State owned Capital to Enrich the Social Security Fund (Guofa [2017] No. 49), the entities responsible for the operation and management of state-owned equity and cash income include: the National Council of Social Security Fund, as well as state-owned sole proprietorship companies established by the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government to centrally hold, manage, and operate the transferred state-owned equity, or companies entrusted to implement special account management for the transferred state-owned equity with state-owned capital investment and operation functions. The Notice proposes that the income obtained from the transfer of state-owned equity and cash income investment shall be treated as non taxable income for enterprise income tax. At the same time, the transfer of state-owned equity of non listed companies by the recipient is exempt from stamp duty that the recipient should pay. In addition, the stamp duty on securities transactions that should be paid for the transfer of state-owned equity of listed companies and the use of cash proceeds to buy and sell securities by the recipient shall be levied first and refunded later. The Notice shall come into effect on April 1, 2024. The taxes already paid before the release of the notice, which comply with the provisions of this notice, can be refunded. Previously, a spokesperson for the Ministry of Finance stated that transferring some state-owned capital to enrich the social security fund is an important measure taken by the Party Central Committee and the State Council to enhance the sustainability of the basic pension insurance system, based on the overall consideration of the reform of the basic pension insurance system and the deepening of the reform of state-owned enterprises. In November 2017, the State Council issued the Implementation Plan for Transferring Part of State owned Capital to Enrich the Social Security Fund, which clearly requires the transfer of 10% state-owned equity of central and local state-owned and state-controlled large and medium-sized enterprises and financial institutions to make up for the gap in the basic pension insurance fund for enterprise employees caused by the implementation of the policy of treating payment years as equivalent. In March 2024, the Ministry of Finance, the Ministry of Human Resources and Social Security, and the State owned Assets Supervision and Administration Commission of the State Council jointly issued the "Interim Measures for the Operation and Management of Transferring and Enriching State owned Equity and Cash Income of Social Security Funds", which made clear provisions for the operation and management of transferring and enriching state-owned equity and cash income of social security funds. Among them, the transferred state-owned equity is centrally held, managed, and operated by the entities designated by the National Social Security Fund Council and provincial governments to undertake the transfer of state-owned equity. The equity dividends and operating income held by the undertaking entity shall be collected in a timely manner by the same level financial department, taking into account the basic pension insurance fund expenditure needs and state-owned capital income situation, and specially used to make up for the gap in the enterprise employee basic pension insurance fund. According to the National Social Security Fund Council's disclosure in April this year, since the first batch of state-owned equity transfers in 2018, the Social Security Fund has received a total of 93 transfers of state-owned equity from central enterprises and central financial institutions. As of the end of 2024, the book value of the transferred state-owned equity is 2.1 trillion yuan. In 2024, 26.422 billion yuan of dividends were received from the transferred enterprises, and a total of 111.606 billion yuan of dividends were received. Recently, Xu Gao, Chief Economist of Bank of China International Securities, stated in a public event that at present, by increasing the transfer of state-owned capital to social security funds, the return of state-owned capital will be directed more towards low-income groups. This will have an immediate effect on boosting consumption in the short term and is also in line with the direction of economic structural transformation in the long run. (New Society)