On January 21, the Ministry of Finance, the State Taxation Administration, and the China Securities Regulatory Commission jointly issued an announcement regarding the continuation of tax policies applicable during the pilot phase for innovative enterprises issuing Chinese Depository Receipts (CDRs) domestically. The announcement specifies that from January 1, 2026, to December 31, 2027, capital gains derived by individual investors from transferring CDRs of innovative enterprises will be temporarily exempt from personal income tax. For dividend income received by individual investors from holding these CDRs, a differentiated personal income tax policy on dividends will be implemented, with reference to the relevant provisions of specific circulars. The innovative enterprise's domestic depository institution will be responsible for withholding the tax and submitting detailed full-amount declarations to the tax authorities where the depository institution is located. Taxes already paid overseas on dividends received by individual investors can be credited in accordance with the Individual Income Tax Law and the provisions of relevant bilateral tax agreements (arrangements).

The full text of the announcement is as follows: Announcement on Continuing the Implementation of Tax Policies During the Pilot Phase for Innovative Enterprises Issuing Depository Receipts Domestically. To continue supporting the implementation of the innovation-driven development strategy, the relevant tax policies applicable during the pilot phase for innovative enterprises issuing depository receipts (hereinafter referred to as Innovative Enterprise CDRs) domestically are announced as follows:

I. Personal Income Tax Policies 1. From January 1, 2026, to December 31, 2027, capital gains derived by individual investors from transferring Innovative Enterprise CDRs will be temporarily exempt from personal income tax. 2. From January 1, 2026, to December 31, 2027, a differentiated personal income tax policy on dividends shall be implemented on dividend income received by individual investors from holding Innovative Enterprise CDRs. This shall be carried out with specific reference to the relevant provisions of Circulars Cai Shui [2012] No. 85 and Cai Shui [2015] No. 101. The tax shall be withheld by the innovative enterprise's domestic depository institution, which shall also submit detailed full-amount declarations to the tax authorities in its locality. Taxes already paid overseas on dividends received by individual investors may be credited according to the Individual Income Tax Law and relevant bilateral tax agreements (arrangements).

II. Corporate Income Tax Policies 1. For corporate investors, capital gains from transferring Innovative Enterprise CDRs and dividend income from holding them shall be subject to or exempt from corporate income tax according to the policies governing capital gains from transferring shares and dividend income from holding shares. 2. Capital gains from transferring Innovative Enterprise CDRs and dividend income from holding them obtained by public securities investment funds (including closed-end and open-end funds) shall temporarily not be subject to corporate income tax, in accordance with the tax policies for public securities investment funds. 3. For Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII), capital gains from transferring Innovative Enterprise CDRs and dividend income from holding them shall be treated as gains from transferring or holding the underlying shares upon which the CDRs are issued, for the purpose of levying or exempting corporate income tax.

III. Value-Added Tax (VAT) Policies 1. Revenue from capital gains derived by individual investors from transferring Innovative Enterprise CDRs shall be temporarily exempt from VAT. 2. Revenue from capital gains derived by corporate investors from transferring Innovative Enterprise CDRs shall be subject to or exempt from VAT according to the policies governing financial commodity transfers. 3. From January 1, 2026, to December 31, 2027, revenue from capital gains derived by managers of public securities investment funds (including closed-end and open-end funds) from transferring Innovative Enterprise CDRs during fund operation shall be temporarily exempt from VAT. 4. Revenue from capital gains derived by QFIIs and RQFIIs from transferring Innovative Enterprise CDRs through entrusting domestic companies shall be temporarily exempt from VAT.

IV. Other Relevant Matters The term "Innovative Enterprise CDRs" as used in this announcement refers to securities issued by pilot enterprises that meet the criteria specified in the State Council General Office Document Guo Ban Fa [2018] No. 21. These CDRs are based on overseas shares, issued by a depository institution within China, and represent the rights and interests of the underlying overseas securities.