In a long-awaited move to provide clarity to the capital gains tax for QFIIs and RQFIIs, the PRC Ministry of Finance, State Administration of Taxation and China Securities Regulatory Commission jointly released the Circular on Issues Relating to Temporary Exemption of Enterprise Income Tax(“EIT”)on Gains from Transfer of Equity Investment Assets Obtained within China by QFIIs and RQFIIs(Caishui [2014] No. 79, “Circular 79”)1 along with the Circular on Issues Relating to the Tax Policy of the Pilot Inter-connected Mechanism for Trading on the Shanghai and Hong Kong Stock Markets (Caishui [2014] No. 81, “Circular 81”)2 on November 14, 2014.Circular 79 and Circular 81 will become effective on November 17, 2014 when the Inter-connected Mechanism for Trading on the Shanghai Stock Market and the Hong Kong Stock Market (“Shanghai-Hong Kong Stock Connect Program”) is officially launched.