(Promulgated by the State Council on December 13, 1993)
These Regulations are formulated in order to regulate the order of land and real estate market transactions, to reasonably adjust the benefit from land appreciation and to safeguard the rights and interests of the State.
All units and individuals receiving income from the transfer of State-owned land use rights, buildings and their attached facilities (hereinafter referred to as `transfer of real estate'), shall be taxpayers of the Land Appreciation Tax (hereinafter referred to as `taxpayers') and shall pay Land Appreciation Tax in accordance with these Regulations.
Land Appreciation Tax shall be assessed according to the appreciation amount derived by the taxpayer on the transfer of real estate and the tax rates prescribed in Article 7 of these Regulations.
The appreciation amount shall be the balance of proceeds received by the taxpayer on the transfer of real estate, after deducting the sum of deductible items as prescribed in Article 6 of these Regulations.
Proceeds received by the taxpayer on the transfer of real estate shall include monetary proceeds, proceeds in kind and other proceeds.
The deductible items in computing the appreciation amount are as follows:
(1) The sum paid for the acquisition of land use rights;
(2) Costs and expenses for the development of land;
(3) Costs and expenses for the construction of new buildings and facilities, or the assessed value for used properties and buildings;
(4) The taxes related to the transfer of real estate;
(5) Other deductible items as stipulated by the Ministry of Finance.
Land Appreciation Tax shall adopt four level progressive rates as follows: For that part of the appreciation amount not exceeding 50% of the sum of deductible items, the tax rate shall be 30%.
For that part of the appreciation amount exceeding 50%, but not exceeding 100%, of the sum of deductible items, the tax rate shall be 40%.
For that part of the appreciation amount exceeding 100%, but not exceeding 200%, of the sum of deductible items, the tax rate shall be 50%.
For that part of the appreciation amount exceeding 200% of the sum of deductible items, the tax rate shall be 60%.
Land Appreciation Tax shall be exempt under any one of the following circumstances:
(1) Taxpayers constructing ordinary standard residences for sale, where the appreciation amount does not exceed 20% of the sum of deductible items;
(2) Real estate taken over and repossessed according to laws due to the construction requirements of the State.
For taxpayers under any one of the following circumstances, the tax shall be assessed according to the assessed value of the real estate;
(1) Concealment or false reporting on the real estate transaction price;
(2) Providing false sums of deductible items;
(3) The transfer price of real estate is lower than the assessed value without proper justification.
Taxpayers shall report the tax to the local competent tax authorities where the real estate is located within seven days of signing the real estate transfer agreement, and pay the Land Appreciation Tax within the period specified by the tax authorities.
Land Appreciation Tax shall be collected by the tax authorities. The department for land administration and the department for real estate administration shall provide the tax authorities with relevant information, and assist the tax authorities in the collection of the Land Appreciation Tax pursuant to the law.
For taxpayers that have not paid the Land Appreciation Tax according to these Regulations, the department for land administration and the department for real estate administration shall not process the relevant title change procedures.
The collection and administration of Land Appreciation Tax shall be conducted in accordance with the relevant regulations of the <Law of the People's Republic of China on Tax Collection and Administration> and these Regulations.
The Ministry of Finance shall be responsible for the interpretation of these Regulations and for the formulation of the Detailed Rules and Regulations for the Implementation of these Regulations.
These Regulations shall come into effect from January 1, 1994. The measures of different districts for the collection of land appreciation fees that contravene these Regulations shall cease to be implemented on the same date.
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.