[photopress:OneParkAvenue.jpg,full,alignright]Land-use tax will triple this year. This means that foreign developers will lose an important tax advantage as part of the country’s efforts to cool its booming real estate market. This is in a recent notice from the State Administration of Taxation so can be taken as being official.
The land-use tax imposed on developers will be raised to between RMB1.5 (19 cents) and RMB30 per square meter per year in big cities, depending on the size and location of the property.
Land-use taxes in other areas will be lifted by RMB0.6 to RMB24. Budget apartments built for low-income families will remain exempt from the tax.
In addition, for the first time, overseas-invested real estate companies will be required to pay the same land-use tax as their domestic counterparts.
Shao Minghao, an analyst at the Shanghai Hanyu Property Agency, said, ‘The land-use tax and other property taxes specified earlier will surely have a very positive influence on the healthy development of the country’s real estate industry. Meanwhile, operations costs for overseas-invested real estate developers will be increased due to the land-use levy.’
Last month, the State Administration of Taxation said on its website that it will begin to formally levy a value-added tax on land — 30%-60% of developers’ net gains from property deals — effective February 1.
China construction Minister Wang Guangtao said the central government intends to require owners of large apartments to pay an annual tax on the value of their homes at some point in the future.
The initial reaction by overseas developers is that the land-use tax won’t have a major influence on their development plans.
An official with Keppel Land, the property arm of Singapore’s Keppel Group, said in an interview, ‘Our finance department is currently working to check how big an effect the new policy will have on our business operation. It may affect our profit margin to some extent, but it won’t change our long-term confidence in and commitment to China’s real estate market.’
Siurce: Shanghai Daily