The Chinese leadership has been considering a plan to abolish tax on dividends paid to shareholders.
According to reports in the nation's media, a meeting of the State Council last month decided to remove the dividend tax, currently levied at a rate of 20%, from this month.
According to data released by companies in 2003, dividends distributed by 655 listed firms totalled 55.43 billion yuan (US$6.7 billion). Analysts have calculated that investors would have received an extra 10.08 billion yuan in dividend payments had the tax not been in place.
The Chinese government has been considering a number of measures recently to liven up the flat stock market, including the creation of an intervention fund to stabilise markets.
In January, the government reduced stamp duty on stock transactions to 0.1% from 0.2% shortly after the Shanghai Composite Index, which tracks Chinese 'A' and 'B' shares slumped to a six-year low.
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