The question of whether stamp duty can be used as development tax and surcharges before land value-added tax requires a comprehensive analysis of the different links and policy differences。
Basic principles and policy context
1. Definition of land value added tax deductions
In accordance with the provisional land value added tax regulations and implementing regulations, deductions are allowed for taxes related to the transfer of real estate (e. G. Turnover tax, city building tax, stamp duty, etc.). However, the stamp duty treatment of real estate developers is unique:
Prior to camp increase: stamp duty is charged to “management costs” as part of real estate development costs, deducted by a 5 per cent or 10 per cent ratio of the sum of “land costs plus development costs” and not separately duplicated。
The increase in battalion size: the account line was adjusted to “taxes and surcharges”, but the land value added tax policy was not synchronized, and most areas continued with the original deduction rule, arguing that the stamp duty had been indirectly deducted through the fee ratio。
2. Policy disputes and local differences
(1) in support of deduction: part of the view is that the accounting [2016] document 22 adjusts the account line and stamp duty should be allowed to be deducted separately if it is accounted for in “taxes and surcharges”. For example, guangdong, shandong and others have made it clear that stamp duties on sales chains can be included in the deduction for “taxes related to the transfer of real estate”。
Circular of the department of revenue of guangdong province on the issuance of the regulations on the settlement of land value added taxes by the department of tax administration of guangdong province (official gazette no. 5 of 2019)
Article 37 audit of taxes relating to the transfer of real estate。
The extent of taxes and surcharges relating to the transfer of real estate should be recognized as being in compliance with the tax provisions. According to the accounting system, the stamp duty paid by the taxpayer is included in the accounting for “management costs” subject, deducted in accordance with the relevant provisions for the development costs of the real estate, included in the accounting for “tax and attachments” subject to deduction for “tax related to the transfer of real estate”. The local education supplement paid by taxpayers may be deducted from the “tax related to the transfer of real estate”. Taxes and surcharges that do not fall within the scope of liquidation or in the context of the transfer of real estate should not be deducted as liquidation。
Proclamation of the state revenue service of shandong province on the publication of the administration of land value added tax settlement in shandong province of the state revenue service (official gazette no. 10 of 2022)
(iv) taxes related to the transfer of real estate, including turnover taxes paid by real estate development enterprises, urban maintenance taxes, stamp duties, education surcharges and local education supplements。
The value added tax (vat) is not included in the item “taxes relating to the transfer of real estate” after the increase in the battalion。
2. Following the increase in the number of battalions, actual municipal maintenance taxes and educational surcharges paid by real estate development enterprises are allowed to be deducted on the basis of accurate calculations of the liquidation project. Where an accurate calculation cannot be made on the basis of the liquidation project, the municipal maintenance tax, the education fee surcharge and the local education surcharge are paid on the basis of the value added tax paid in advance on the liquidation project。
(2) against the mainstream approach to deductions: most regions (e. G. Sichuan, zhejiang) consider that stamp duty, regardless of the adjustment in the accountancy line, should not be duplicated, as it is indirectly reflected through cost ratios。
(ii) deduction of stamp duty
Article 7 (5) of the rules for the application of the provisional land value added tax provides that taxes relating to the transfer of real estate are deductions for the calculation of value added. Circular of the ministry of finance, the state tax administration on specific issues of land value added tax (fiscal word [1995] an exception is made to the rule that a stamp duty, which is allowed to be deducted, is the stamp duty paid at the time of the transfer of the property. In accordance with the relevant provisions of the financial system of the construction, real estate development enterprises, the stamp duty paid by the real estate development enterprises is included in the administrative expenses and deducted accordingly. Other land value-added tax taxpayers allow deduction of stamp duty paid at the time of transfer when calculating land value-added tax. Therefore, stamp duty is deducted as a real estate development cost. The rules for the application of the provisional regulations on land value added tax (vat) also provide for the deduction of real estate development costs from the sum of 10 per cent of the costs of land development and new housing and associated facilities, in cases where interest-sharing expenses cannot be calculated on the basis of the transfer of real estate items or the financial institution cannot be certified。
Vat accounting treatment provisions (cfo [2016] 22) requires that the name of the subject “operational taxes and appendices” be changed to “taxes and appendices” and that stamp duties, which were previously accounted for in administrative costs (taxes) be included in the subject “taxes and appendices”. How can stamp taxes be deducted when the new accounting system is in place? Some tax officials have different perceptions of this. According to the author, the fiscal word document no. 48, which at the time did not provide for a separate deduction of stamp duty for the sale of development products by real estate enterprises, is now subject to revision of the accounting system on the basis of the prevailing law (rules implementing the regulations and the financial system of real estate development enterprises) and should have been adjusted accordingly。
02. Treatment of different bands of stamp duties
1. Stamp tax on access to land
Land is acquired by means of a signage, and a stamp tax on land concessions is a “payment for access to land”, is included in the cost of land and allows for deductions, and is included in the “management costs” as part of the development costs of real estate. According to the regulations, real estate development costs are deducted at the 5 per cent or 10 per cent limit of the “land tenure amount + development cost” ratio, which is covered by stamp duty and cannot be deducted separately。
According to the circular of the ministry of finance, the state revenue service on specific issues of land value added tax provisions (fiscal word [1995] number 48)
Ix. Question of the deduction of stamp duty paid when calculating value added
The rule allows deduction of stamp duty by means of stamp duty paid at the time the real estate is transferred. In accordance with the relevant provisions of the financial system of the construction, real estate development enterprises, the stamp duty paid by the real estate development enterprises is included in the administrative expenses and deducted accordingly. Other land value-added tax taxpayers allow deduction of stamp duty paid at the time of transfer when calculating land value-added tax。
Stamp duty for the development chain
Contract stamp duties for design, construction, procurement, etc., are charged to “management costs” before the battalion is converted to “tax and surcharges”, but the land value added tax is still deducted in proportion to the cost and cannot be charged separately。
3. Stamp duty on sales chain
In accordance with the provisions on the treatment of vat accounting [2016] in document no. 22, stamp duty on the sale chain is no longer included in the “management fee”, but in the “tax and attachments”, land value added tax legislation is based on the accounting treatment at the time, and although accounting policy has changed, land value added tax legislation is intended to remain unchanged, even if stamp duty is included in the “tax and attachments”, and cannot be deducted from the calculation of land value added tax。
The non-household enterprise transfers old houses: stamp duties on the transfer chain are deducted separately。
(b) the sale of new premises by enterprises: in most areas, deductions are not permitted, except in guangdong, where, for example, the province of guangdong provides for a separate deduction if stamp duty is included in “taxes and surcharges”。
Proclamation issued by the department of revenue of guangdong province, state tax administration (official gazette no. 5 of 2019)
Article 37 makes it clear in the audit of taxes relating to the transfer of real estate that the extent of taxes and surcharges relating to the transfer of real estate should be determined in accordance with the tax provisions. According to the accounting system, the stamp duty paid by the taxpayer is included in the accounting for “management costs” subject, deducted in accordance with the relevant provisions for the development costs of the real estate, included in the accounting for “tax and attachments” subject to deduction for “tax related to the transfer of real estate”. The local education supplement paid by taxpayers may be deducted from the “tax related to the transfer of real estate”. Taxes and surcharges that do not fall within the scope of liquidation or in the context of the transfer of real estate should not be deducted as liquidation。
Substantive and operational recommendations
1. Focus on local policies
In some provinces, deductions from sales stamp duty are allowed, depending on the local tax authority's calibre. It is recommended to communicate with tax authorities in advance to avoid disputes。
2. Accounting treatment and tax adjustments
If an enterprise includes stamp duty in the “tax and attachment”, it needs to be adjusted proactively in the liquidation of the land value added tax to clarify whether it is deductible。
3. Avoidance of risk deductions
If stamp duty is charged to both administrative costs and tax deductions, it may be identified by tax authorities as a double charge, leading to tax adjustments. The stamp duty on the development chain has been deducted in proportion to the cost, and the stamp tax on the sale chain, if permitted by local policy, needs to ensure that it is not duplicated with other cost items。
4. Legitimate evidentiary requirements
All deductions must be duly documented (e. G. Tax clearance certificate, contract, etc.), otherwise they cannot be deducted。
Special types of transactions
In the case of the transfer of undeveloped land, a distinction is made between the acquisition chain, which is charged to management costs, and the stamp duty, which is deducted as a tax。
“taxes and surcharges” usually refer to surcharges based on vat (e. G. City building taxes, education surcharges, etc.). In contrast, stamp duty is a behavioural tax, which is included in the “management fee” before the conversion, and is part of the development cost of real estate, which is deducted by the sum of 5 per cent or 10 per cent of the “land cost + development cost” and cannot be repeated separately; in the event of the increase, the account for stamp duty is adjusted to “tax and attachments”, but the land value-added tax policy is not synchronized, and real estate development enterprises can generally not be deducted separately as “development tax and attachments” before the land value-added tax。
Specific operations need to be combined with local policy and tax agency requirements to avoid tax risk arising from double deductions or omissions。
