June 28, 2011 (Press Release) Further Information on the Payment of Final Dividends
Pursuant to the Notice on Matters Concerning Income Taxes on Profits on Transfer of Shares (Equity Interests) and on Dividends Received by Enterprises Invested by Foreigners, Foreign Enterprises and Individual Foreigners (Guo Shui Fa [1993] No. 45) (《關於外商投資企業、外國 企業和外籍個人取得股票(股權)轉讓收益和股息所得稅收問題的通知》(國稅發[1993]45 號)) (the “Notice”) issued by the State Administration of Taxation in 1993, individual foreigners holding H shares were temporarily exempted from individual income tax for the dividends (bonus) received from PRC enterprises which issued such H shares. Due to recent changes in the PRC tax laws and regulations, the State Administration of Taxation issued the Announcement on the List of Fully and Partially Invalid and Repealed Tax Regulatory Documents (《關於公布全文失效廢止、部份條款 失效廢止的稅收規範性文件目錄的公告》)(the “State Administration of Taxation Announcement”) on 4 January 2011. Pursuant to the State Administration of Taxation Announcement, the Notice was invalid and repealed. Based on the Company’s current understanding, the Notice can no longer be the basis for individual shareholders who hold the Company’s H shares and whose names appear on the register of members of H shares of the Company (the “Individual H Shareholders”) to be exempted from individual income tax when the Company distributes the Final Dividends.
Pursuant to relevant laws and regulations including the PRC Individual Income Tax Law (《中華人 民共和國個人所得稅法》), the Implementation Regulations of the Individual Income Tax Law (《中華人民共和國個人所得稅法實施條例》) and the Tentative Measures on Withholding and Payment of Individual Income Tax (《個人所得稅代扣代繳暫行辨法》) (collectively, “Relevant Regulations”), as well as opinions from the relevant PRC tax authorities, the Company is required to withhold and pay the individual income tax of 20% on behalf of the Individual H Shareholders upon their receipt of dividends and bonuses from Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI). The Individual H Shareholders may enjoy the relevant preferential treatments (if any) in accordance with the relevant regulations including tax agreements (arrangements) subject to the confirmation from tax authorities based on the information provided by such Individual H Shareholders.
In view of the time required for collecting the relevant information from the Individual H Shareholders and obtaining relevant tax authorities’ confirmation, the Board hereby announces that, in order to ensure the Company’s compliance with Relevant Regulations while following the timetable for payment of dividends to all shareholders, if the Final Dividends are approved by the shareholders at the 2010 annual general meeting convened on 29 June 2011, the Company will temporarily withhold 20% of the dividends to be distributed to the Individual H Shareholders when Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) distributes the Final Dividends to the Individual H Shareholders. The Company will closely further communicate with tax authorities and will publish an announcement if there is any subsequent progress. After the tax authorities have ultimately confirmed such individual income tax withheld and paid by Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) based on information provided by the Individual H Shareholders, the Company would, if applicable, refund the corresponding amount of tax to the relevant shareholders who are qualified for such refund on a timely basis.
Shareholders are recommended to consult their taxation advisors regarding the owning and disposing of H shares of the Company in the PRC and in Hong Kong and other taxation impacts. Other information in respect of the distribution of the final dividends as disclosed in the Notice of 2010 Annual General Meeting remains unchanged.
By Order of the Board
Zhang Jingming
Company Secretary
Shanghai, PRC, 28 June 2011
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