Listed Companies: Classic Tax Cases on Stock Reduction

On March 17, 2020, Fuzhou Honghui, Zhuhai Honghui, Pingtan Jianfa, and Suzhou Wairun jointly signed a 'Share Transfer Agreement,' whereby Suzhou Wairun transferred its 4.59% equity stake in Haooubo to these three companies for RMB 105 million. Chen Tao, the executive partner of Suzhou Wairun, effectively transferred his indirect holdings in Haooubo—held via Suzhou Wairun—to external companies. Following the transfer, Suzhou Wairun repurchased Chen Tao’s capital contribution share, reducing his ownership interest in Suzhou Wairun from 22.05% to 0.17%. In March 2020, Haooubo’s actual controller transferred part of his indirectly held Haooubo shares—via Suzhou Wairun—to external investment funds, paying individual income tax at a 20% rate. However, in July 2021, the tax authority demanded back-payment of tax at a 35% rate, plus RMB 17 million in late-payment penalties. Analysis: The State Taxation Administration (STA) has explicitly stated that gains from stock transfers by partnership enterprises shall be taxed as business operation income. In August 2018, the STA Inspection Bureau issued the 'Guiding Opinions on Equity Transfer Inspections in 2018' (SAT Inspection Letter [2018] No. 88), noting that some local governments—seeking economic development and foreign investment—had unilaterally stipulated that natural-person partners of investment-oriented partnerships should pay individual income tax at a flat 20% rate. Yet under the current Individual Income Tax Law, partners of partnership enterprises are taxpayers; gains from stock transfers by such enterprises must be taxed under the 'distribution-then-taxation' principle, treated analogously to 'income from individual industrial and commercial operations,' and subject to a progressive tax rate ranging from 5% to 35%. Local government regulations contravene Article 3 of the Tax Collection and Administration Law and must therefore be rectified. VI. Indelible Tax Obligations—Even After Dissolution: Three-Tier Partnership Structure, Stock Reduction, and Subsequent Dissolution—Partners Audited and Taxed Luo Xiaojie, Fan Ting, and seven other individuals sold shares of a listed company through a three-tier partnership structure. Although all these partnership enterprises were subsequently dissolved, the natural-person partners’ individual income tax obligations did not vanish with the dissolution of the entities. On August 22, 2022, the Anyang City Tax Bureau’s First Inspection Bureau issued 'Tax Treatment Decisions' to Luo Xiaojie, Fan Ting, and the other seven individuals, requiring them to pay an aggregate RMB 4.38 million in underreported individual income tax. Analysis: When natural persons conduct equity transfers through multiple partnership enterprises, the taxpayer must first be identified and operating income calculated. Such operating income must be ‘pierced through’ layer-by-layer to the ultimate natural-person partners, with calculations adjusted according to the specific circumstances of each partnership enterprise. Yutai Microelectronics Co., Ltd.—a company preparing for IPO—had its actual controller originally intended to transfer shares directly to external buyers. However, since natural persons would have incurred a 20% individual income tax liability, they adopted an alternative approach: first establishing a partnership enterprise, then transferring the shares to it at a low price, and finally having the partnership sell the shares to external buyers at market price and pay individual income tax accordingly. Yutai Micro stated this maneuver was undertaken for tax planning purposes. Yutai Micro stated: 'Talos partners Wang Fen and Shi Dawu have already engaged in discussions with the tax authorities regarding the tax planning aspects of this equity transfer.'

CFO Interview I CFO of the Asia-Pacific Region of a U.S. Fortune 500 Company: Longevity Strategies for Century-Old Enterprises and Building a Learning Organization

Companies face different developmental imperatives at different stages—and the value embodied by the CFO likewise evolves accordingly. If a company preparing for an IPO demands a CFO with strong compliance expertise and broad financing networks, then a century-old U.S. Fortune 500 leader in specialty chemicals demands something more: a CFO who deeply understands and practices 'long-termism.' In this CFO interview, we spoke closely with Charles FEI, CFO of Cabot Corporation’s Asia-Pacific region. He explained that the secret to corporate longevity is not mysterious—but few companies possess the unwavering commitment required to stay true to their founders’ core business. When discussing internal control and compliance, we noticed him instinctively sit up straight—a posture reflecting the professional integrity deeply ingrained in every Cabot employee. He began his career as Sony’s first local employee in China, later worked at PepsiCo China and Kimberly-Clark China, and now oversees finance, risk management, treasury, and tax planning for Cabot across the Asia-Pacific region—accumulating over two decades of multinational financial management experience. Exuding the typical openness and affability of a foreign-enterprise executive, he nevertheless reveals—in subtle details—the meticulousness and rigor characteristic of finance professionals. He places strong emphasis on every employee’s growth, proactively creates learning opportunities for the organization, and generously shares his own learning journey and career advice with younger colleagues. Cabot Corporation (NYSE: CBT) is a global leader in specialty chemicals and high-performance materials, headquartered in Boston, Massachusetts, USA. It helps customers advance their businesses across transportation, infrastructure, environmental, and consumer goods industries. Founded in 1882 by Harvard graduates Godfrey Cabot and his brother Samuel Cabot, the company began as a carbon black manufacturing plant named after the brothers’ surname. Over the past 140 years, Cabot has maintained its place on the Fortune 500 list—anchored solely by its carbon black business. I. Three Career Development Recommendations for Finance Professionals Charles’s entire career has unfolded within multinational corporations. He joined Sony—then at the height of its success—in 1995 as its first locally hired employee, spending the first decade of his professional life there. He considers this period critically important. First, foreign enterprises at the time already featured relatively mature management systems, placing strong emphasis on finance professionals’ understanding of business operations—prompting him to pursue both an MBA and an EMBA. Second, during this time, he 'accumulated' several professional credentials—including the Australian CPA and China’s Certified Public Accountant qualification. Regarding experiences worth sharing, he advises young peers to earn additional certifications or pursue further degrees—especially an MBA. Though highly effective for broadening finance professionals’ thinking and perspectives, optimal learning outcomes require integrating theory with practice—only possible after gaining familiarity with all facets of corporate management and operational systems. After leaving Sony, he held brief positions at two leading U.S.-based companies—PepsiCo and Kimberly-Clark—before choosing to settle long-term at Cabot. This 140-year-old yet vibrantly dynamic U.S. enterprise champions integrity and excellence. Its organizational culture fosters a familial atmosphere and mutual respect among colleagues—an environment that feels exceptionally comfortable. Unknowingly, Charles has spent 15 years at Cabot. After serving many years as Finance Director for China, his boss told him: 'Your financial knowledge is solid—but you don’t yet understand the business.'

Cabot Corporation Interim CFO Steven J. Delahunt Sells 355 Shares via Tax Withholding on November 10, 2026

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Cabot Corporation Interim CFO Steven J. Delahunt sold 355 shares at $72.19 each on November 10, 2026, for tax withholding purposes, retaining 5,044 shares.

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