09.08.10 01:51 Age: 9 yrs
SAT Clarified Completion Conditions of Real Estate Product
On May 12 2010, the State Administration of Taxation (SAT) issued the Notice of Clarifying the Completion Conditions of Product Developments of Real Estate Development Enterprise (Guo Shui Han  No.201) (Notice 201) pursuant to previous Circulars concerning enterprise income tax (EIT) of real estate development enterprises (REDEs).
In accordance with Notice 201, the completion conditions of real estate product development are: (1) the REDE starts to deliver to the developed product; or (2) the developed product is put into actual use. If only one of these conditions is met, the real estate product is assumed to be complete. In contrast, the following situations are not completion conditions: (1) whether the product is verified for acceptance; (2) whether the completion is registered; and (3) whether final accounting is complete.
“Notice 201 aims at avoiding evasion of EIT of REDEs,” said Bexcel Chen, attorney of Lehman, Lee & Xu. He further explained, “The calculation of annual EIT is based on the completion of developed product. Some REDEs, however, delay the completion by delivering the products before verification for acceptance. Notice 201 has plugged up the loophole.”
Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm has also been recognized as one of the top full service as well as intellectual property firms in China by several international magazines. The law firm is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.
To learn more about us, please visit our website at www.lehmanlaw.com.