[photopress:luxury_apartments.jpg,full,alignright]China has reintroduced the collection of a land appreciation tax as the country’s property boom shows no signs of abating.
The State Administration of Taxation last month decided to reintroduce the value-added tax (VAT) on land. According to the January 16 government notice, the VAT, which has been suspended for more than a decade, is now in effect.
Property developers will have to pay 30 to 60% of their net gains as VAT. The tax will depend on the net profit from the sale of a property.
If the value-added rate is below 50% the tax will be 30%.
If the value-added rate is between 50 and 100%, 40% will be levied.
If the value-added rate is between 100 and 200%, 50% will be levied.
If the value-added rate is more than 200%, 60% will be levied.
The VAT will be collected when a single project is completed or transferred, according to the notice. Excessive profit margins are said to be one factor behind the country’s soaring housing prices.
The State Administration of Taxation issued a notice shortly after the announcement that the tax is aimed at readjusting the profits of property developers and would not burden buyers.
Li Wenjie, manager of Beijing Zhongyuan Real Estate, said the effect of the value-added rates depends on its enforcement by the tax authorities. He said, ‘Developers who invest in luxurious houses would be severely put under scrutiny. The scrutiny would be less on developers who build affordable houses.’
Source: China Daily-Xinhua