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Announcement of Qingdao Local Taxation Bureau on Relevant Issues Concerning the Pre-payment and Levy & Collection of Land Appreciation Tax by Assessment

Document No.:Announcement No.1, 2014 of Qingdao Local Taxation Bureau

Taxes:Land Appreciation Tax

Date of Promulgation:2014-03-01

IssueDepartment:Local Taxation Bureaus of Localities

Date of Implementatio:2014-02-26


In accordance with the “Provisional Regulations of the People's Republic of China On Land Appreciation Tax” and its detailed rules for implementation, and other relevant provisions of Ministry of Finance and State Administration of Taxation, combining the reality of Qingdao, we decide to further standardize the management of pre-payment and levy & collection of land appreciation tax (LAT) by assessment on the real estate development projects of Qingdao, and we hereby notify the relevant issues as follows:


I. Issue on the pre-payment of LAT on real estate development projects


(i) Before the receipt of LAT liquidation audit conclusions of real estate development projects made by the in-charge taxation authorities, all proceeds and related economic benefits (including monetary income, income in kind and other income) obtained by taxpayers from the transfer of real estate shall be subject to the pre-payment of LAT at a prescribed rate.


During the process of products development, the renovation costs, equipment installation fees, management fees, commission charges and consultancy fees, and other additional fees charged by taxpayers together with the housing price from home buyers shall be included in the real estate transfer income and treated as a part of the assessable price of housing sales for purpose of  pre-payment of LAT.


(ii) For taxpayers engaged in development, construction and sales of the real estate, the pre-levying rate of LAT are as follows:


1. Ordinary-normal housing, 2%. Those with a house price of more than RMB20,000 Yuan per square meter and less than RMB 25,000 Yuan, 3%; those with a house price of more than RMB25,000 Yuan, 5%.


2. Non-ordinary-normal housing, 3%. Those with a house price of more than RMB20,000 Yuan per square meter and less than RMB 25,000 Yuan, 4%; those with a house price of more than RMB25,000 Yuan, and villa (single commercial residential buildings), 5%.


3. Seperate sales of garage, parking spacegarret, storage and other ancillary facilities, 3%.


4. Commercial buildings and official buildings, 5%.


Affordable housing, low-rent housing, price-controlled housing and other policy-supporting housing sold by taxpayers are not subject to LAT for the time being; the sales of commercial buildings and non-ordinary-normal dwelling housing in affordable housing projects, however,   shall be subject to the pre-payment of LAT according to regulations.


The classification standard of property types shall be subject to relevant provisions of real estate sales (pre-sales) registration and ownership registration; the demarcation between ordinary-normal housing and non-ordinary-normal housing shall be subject to relevant provisions of Qingdao Peoples Government.


(iii) If the average house price of a real estate project developed and constructed by a taxpayer is significantly higher than that of the real estate in the region, and it has a higher appreciation volume and is subject to a higher rate, the in-charge taxation authority may, after the project has a pre-sales (sales) license, inform the taxpayer to provide the information on land cost, construction & installation cost and selling price, etc., roughly estimate the expected appreciation volume and determine the LAT rate. If the type of the classified real estate surpasses the pre-levying rate as regulated in paragraph (ii) of this Article, the in-charge taxation authority shall issue the Notice on Tax Matters to the taxpayer, who needs to pay LAT in advance according to the tax rate roughly estimated.


After the receipt of Notice on Tax Matters, the taxpayer shall no longer implement the regulations of paragraph (ii) of this Article, and shall, within the reporting period of the next month, calculate and make up the balance between the advance payment of LAT on real estate transfer income at the earlier stage of the project and the tax payable calculated according to the tax rate informed by the in-charge taxation authority.


II. Issue on the levy & collection of LAT by assessment


(i) The levy & collection of LAT by assessment shall be pre-conditioned on the regulations of Article 34 of “Procedures on the Administration of Settlement of Land Appreciation Tax” (Guo Shui Fa [2009] No.91) issued by State Administration of Taxation.


(ii) When levying LAT by assessment on qualified real estate development projects, taxpayers shall be informed to provide the data and information of revenues and major costs on development projects for the purpose of making estimation in the following order, thus separately assessing the LAT payable of three types of development product, namely the ordinary-normal dwelling housing, the non-ordinary-normal dwelling housing, and the villas and non-residential constructions:


1. To get the data of transfer income of development projects, and to adjust those whose transfer prices are significantly low and without justifiable reason according to the regulations:


2. To consult tax related records, including the amount of deed tax; to make inquiries to departments of land and resources and finance departments, for the purpose of obtaining the price paid for land use right of the project, and the amount of financial subsidies, etc.;


3. To make inquiries to construction management departments about the bidding, budgeting, settlement and other information for the purpose of determining the construction project cost, or to determine the construction project cost by referring to the annual cost indexes per SQ of construction and installation projects issued by construction management departments at all levels; to determine other development costs according to the charging standards of supporting fees, design fees and other relevant fees. Real estate development costs shall be calculated according to 10% of land costs and development costs;


4. To estimate the amount of LAT, and to calculate and deduct the related additional deductions and taxes according to the provisions;


5. To determine a reasonable levy & collection rate of LAT of products developed by types. If the amount of LAT payable calculated by assessment is lower than the amount of taxes calculated according to the inferior limit regulated in the Detailed Statement of the Rate of Levy & Collection by Assessment of LAT of Real Estate Development Projects, LAT shall be levied by assessment according to the levying rate as regulated in the said statement.


(iii) The LAT collection on the conveyance of housing stock shall be subject to the provisions of Announcement of Qingdao Local Taxation Bureau on Several LAT Issues Concerning the Conveyance of Housing Stock (No.7, 2011). The rate of levy & collection by assessment shall be subject to the revised Detailed Statement on the Rate of Levy & Collection by Assessment of the Conveyance of Housing Stock.


III. In this announcement, the term more than does not include the value per se, and terms not more than and not less than include the value per se.


IV. The present announcement shall come into force on March 1, 2014, valid until December 31, 2018. The Announcement of Qingdao Local Taxation Bureau on Adjusting the Pre-levying Rate of LAT on Real Estate Development Projects (No.1, 2011), the Notice of Qingdao Local Taxation Bureau on Adjusting the Classified Approved Collection Rate of LAT (Qing Di Shui Fa [2010] No.105) and the appendix of Announcement of Qingdao Local Taxation Bureau on Several LAT Issues Concerning the Conveyance of Housing Stock (No.7, 2011) shall be annulled at the same time.


The announcement is hereby given as above.


Qingdao Local Taxation Bureau

February 26, 2014


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