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Xinjiang Goldwind (2208) hits investors with taxable bonus shares
Company circular, 12-May-2017
Bonus shares are normally just a waste of paper and costs, but when an H-share issuer does one, by transferring retained profits to share capital, then it triggers a 10% witholding tax on par value. Yes, it's stupid, but China thinks that a bonus share is a benefit. So how do you withhold tax on a bonus share? Answer: you declare a cash dividend and deduct it from that. Goldwind will pay a dividend of CNY0.20, less 10% tax, less CNY0.03 for tax on the bonus shares. So in effect, there will be a 25% withholding tax on this dividend. Stupid.

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