on the marketReal estateIn the absence of a definitive retention tax, tax administrations are tightening tax collection for developers。
According to a reporter in the 1st financial journal, since the beginning of the year several local tax authorities have begun to strengthen real estate development enterprisesLand value added taxThe strength of the command. This is considered an important tool for real estate market regulation。
From henan, guangxi, shanghaiShumenAccording to documents issued by tax authorities in other places, the specific measures that have been strengthened include higher rates of advance collection, conversion of the approved collection to an audit collection, and stricter requirements for enterprises to liquidate land value-added tax (vat) within a specified time frame。
The advance rate is up
The function of the land value added tax is to tax real estate value added by the state, which is taxed on land and buildings on the ground and is based on value added。
Since 1994, the general tax administration has imposed a land value-added tax on the basis of a level iv excess progressive rate. That is, the value added does not exceed 50 per cent of the amount deducted from the project and the tax rate is 30 per cent; the value added exceeds the amount deducted by 50 per cent to 100 per cent. The tax rate is 40 per cent and the value added exceeds the deduction of 100 to 200 per cent. The tax rate is 50 per cent; the value added exceeds the deduction of more than 200 per cent of the project amount and the tax rate is 60 per cent。
In practice, however, owing to the greater technical difficulties of accounting for the costs of development enterprises and the lack of strict time limits for collection, land value added tax (vat) has been applied on an ad hoc basis, with most areas being charged as 1 to 2 per cent of pre-sale housing income。
Increasing the rate of pre-recruitment was one of the most important elements of this campaign. For example, in late february, the guangxi tax office issued a communication requesting that the land value-added tax (vat) forecast rate be adjusted as of 1 march 2010, with a 0. 5 per cent advance rate for ordinary dwellings and a doubling rate for non-ordinary dwellings. 2%-3% advance。
The recent publication by the land tax office of henan province also clearly states that the land value added tax (vat) rate is 1. 5 per cent for general standard dwellings; 3. 5 per cent for dwellings other than general standard dwellings; and 4. 5 per cent for real estate projects other than those described above。
In addition to the increase in the advance rate, the henan provincial land tax administration also requires that all real estate development project taxpayers, from the date of the implementation of the circular, be subject to an advance rate of land value-added tax on the basis of a check-in basis, and that, once the conditions for liquidation of the land value-added tax have been met, the taxpayer be self-liquidated and the tax settled。
Clearing the storm
The liquidation of land value added tax (vat) may have a significant impact on developing enterprises if the increase in pre-charge rates does not have a significant impact on them。
Previously, land value added tax (vat) was usually paid together with the transfer tax at the time of the sale of the house at a prepaid rate, pending liquidation when the project development was eligible for liquidation. As a result of higher land value added tax rates, former real estate developers often resort to phased development, tailings retention and various financial instruments to delay and avoid liquidation。
In early 2007, the state tax administration issued a circular on issues related to the settlement and management of land value added tax (vat) of real estate development enterprises, which radically changed the conditions for the liquidation of land value added tax (vat) by stipulating that property development projects that had been completed and accepted, with transferred real estate buildings accounting for more than 85 per cent of the total area available for sale, or, although not more than 85 per cent, the remaining area available for sale had been leased or used for their own use; and that land value added tax (vat) settlement had to be carried out after three years of obtaining a sales licence (pre-sale)。
Since then, however, due to the financial crisis, this requirement has not been well implemented. According to liu tianyong, the founding partner of the chinese tax law office, for example, in beijing, less than 1 per cent of hundreds of real estate development enterprises have completed the liquidation of land value added tax。
This time, in henan, guangxi and elsewhere, there is renewed emphasis on strengthening the liquidation of land value added tax. The land tax office of henan province provides for the imposition of a land value added tax at an authorized rate of 8 per cent for property development enterprises that have been liquidated after an order of the tax authorities and are not liquidated because of incomplete books of account or because the books are in disarray and the conditions for liquidation have not been met。
The liquidation of land value added tax has also been strengthened in shanghai, xiamen and hainan. Of these, the shanghai city tax administration issued a document in january of this year, whereby taxpayers are required to settle real estate development projects that meet the requirements of more than 85 per cent of sales, etc., within 90 days of receipt of the land value added tax settlement notice。
Will the liquidation of the land value added tax end as well as last time? In an interview with the newspaper's journalist, liu tianyong argued that, in the face of an increasingly visible housing bubble and facing the completion of fiscal revenue tasks, the fiscal sector might “finish the liquidation”。
