Draft of Real Estate Tax Expected in 2017

Xinhua: Draft of real estate tax law expected to unveil in 2017, tax rate a concern
Legislation on real estate tax once again becomes a highlight on the market.

This issue was proposed by the finance minister Lou Jiwei this time. At the High-level Tax Symposium of the G20 Finance Ministers and Central Bank Governors Meeting held on July 23, Lou said it is regret that reforms on real estate tax and individual income tax have not been introduced, due to weakness in information gathering and hindrance from interested parties. But he indicated that China will “proceed without hesitation on this issue”.

China Business News learnt that draft on real estate tax law currently is still under preparation, and there are many difficulties to be addressed. However, information gathering work on levying real estate tax on natural person has been accelerated. The Ministry of Land and Resources (MLR) has vigorously pushed forward unified registration of real estate. This will provide regulators with better knowledge on the real estate industry and lay a more solid foundation for the launch of real estate law. The State Administration of Taxation (SAT) this year has introduced the Third Phase of the Golden Tax Project in all the provinces nationwide, for the purpose of creating files on every natural person, including personal information on property. This measure has paved the way for real estate tax reform.

...How to determine the tax rate of real estate tax is also a key issue attracting much attention. In Shanghai, different tax rates from 0.4 to 0.6 percent are implemented, and 0.5 to 1.2 percent for Chongqing.

Many experts now believed that exemption scope should be designed after real estate taxation, and only the parts excessive to basic demands of a person’s living could be taxed.

However, there are two different views in the market to this respect. Some believe that exemption scope should base on living area per capita, for example, living area of 60 square meters is not taxed in Shanghai according to the pilot real estate tax. But others think that the exemption amount should base on house value, as values of the same living area may differ a lot in different areas, and exemption based on living area per capita will benefit high price house owners, but not favorable for low-price ones.

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