Preferential tax policy in pipeline for Stock Connect program

The Shanghai-Hong Kong Stock Connect program will offer preferential policies in terms of capital gains tax, according to brokerage.

"We have learned from the Shanghai Stock Exchange that the capital gains tax arrangement will be announced soon, and the authority would give some preferential treatment to stock connect investors, compared to the former Qualified Foreign Institutional Investors (QFII) and Renminbi QFII schemes," the Shanghai-based National Business Daily reported, quoting a source with Industrial Securities.

A source with a Hong Kong-based brokerage told China Daily on Wednesday that there might be a tax waiver at the beginning of the through-train stock program.

"I heard there will be a tax exemption period which could last six months, or the first three years," he said.

The Chinese authority has not yet clarified capital gains tax for the QFII and RQFII schemes, and international investors mostly conduct a 10 percent provision for their China-sourced capital gains.