General Regulations of P. R. China Ⅺ

Article 1 These Regulations were formulated to broaden the scope of regulation of the land and real estate business market, to fairly apportion land appreciation levies and to maintain State revenues.

Article 2 All units and individuals who receive income from the transfer of State- owned land use rights, buildings and their attached facilities (hereinafter referred to as 'transfer of real estate'), shall be taxpayers of the Land Appreciation Tax(hereinafter referred to as 'taxpayers'), in accordance with these Regulations.

Article 3 Land Appreciation Tax shall be calculated using the amount of appreciation obtained by the taxpayer from the transfer of real estate and the tax rates prescribed in Article 7 of these Regulations.

Article 4 The amount of land appreciation is the amount remaining when the amount of deductions, allowable according to Article 6 of the Regulations, is subtracted from the income received by the taxpayer from the transfer of the real estate.

Article 5 Income received by the taxpayer from the transfer of real estate includes monetary income, income in kind and other income.

Article 6 In calculating the amount of appreciation, the deductible items are as follows:

A. the amount paid out for the transfer of land use rights;

B. costs and expenses incurred in developing land;

C. costs and expenses incurred in construction of new buildings , or the assessed value for existing buildings and constructions ;

D. taxes paid in relation to the transferred real estate;

E. other deductible items as stipulated by the Ministry of Finance.

Article 7 Land Appreciation Tax is implemented on a four-level progressive tax rate schedule as follows:

for the part of the appreciation not exceeding 50% of the total deductible items, the tax rate shall be 30%;

for the part of the appreciation exceeding 50% but not exceeding 100% of the total deductible items, the tax rate shall be 40%;

for the part of the appreciation exceeding 100% but not exceeding 200% of the total deductible items, the tax rate shall be 50%;

for the part of the appreciation exceeding 200% of the total deductions, the tax rate shall be 60%.

Article 8 In any of the following circumstances, Land Appreciation Tax will not be levied:

A. where a taxpayer constructs an ordinary standard residence for sale, and the amount of appreciation does not exceed 20% of the total amount of deductions;

B. where, due to construction requirements of the State, real estate is repossessed according to law.

Article 9 Where a taxpayer falls into any of the following situations , tax shall be calculated according to the assessed value of the real estate:

A. concealing or falsely reporting the actual selling price of the real estate;

B. where the amount of deductions claimed is unrealistic;

C. the actual transfer price of the real estate is lower than the appraisal price, without proper justification.

Article 10 Taxpayers shall report to the local taxation authorities where the real estate is located within seven days of signing the real estate transfer agreement, and shall pay the Land Appreciation Tax within the period specified by the taxation authorities.

Article 11 Land Appreciation Tax shall be collected by the taxation authorities. The Department of Land Administration and Department of Real Estate Administration shall provide the taxation authorities with relevant information, and shall assist the taxation authorities to collect the Land Appreciation Tax in accordance with the law.

Article 12 Where taxpayers have not paid the Land Appreciation Tax according to these Regulations, the Departments of Land Administration and Real Estate Administration shall not carry out the relevant title change procedures.

Article 13 Collection and Administration of the Land Appreciation Tax is carried out according to regulations in "Law of the People's Republic of China on the Administration of Tax Collection" and relevant regulations in these Regulations.

Article 14 The Ministry of Finance is responsible for interpreting these Regulations, and for formulating the Detailed Rules for their implementation.

Article 15 These Regulations take effect as of January 1, 1994. If the methods of levying Land Appreciation fees in any region are in conflict with these Regulations, those methods shall cease being implemented.

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