Circular of the State Administration of Taxation on Issues Concerning the Liquidation and Administration of Value-Added Tax for Land of Real Estate Developers

Circular of the State Administration of Taxation on Issues Concerning the Liquidation and Administration of Value-Added Tax for Land of Real Estate Developers

Guo Shui Fa [2006] No. 187

December 28, 2006

The local taxation bureau of each province, autonomous region, municipality directly under the central government and city specifically designated in the state plan, and the office of state administration of taxation of the Autonomous Regions of Ningxia and Tibet:

In order to further strengthen the liquidation and administration of the value-added tax for land for real estate developers, the relevant issues are hereby notified according to the Law of the People's Republic of China on the Administration of Tax Levying, the Interim Regulations of the People's Republic of China on Value-added Tax on Land and the relevant provisions:

Article 1 Settlement Unit for Value-Added Tax for Land
Value-added tax for land shall be settled on the basis of the real estate development projects examined and approved by the relevant authority of the state, and projects developed in phases shall be settled on the basis of the project phase.
In case a development project contains both ordinary residence and non-ordinary residence, the incremental amounts shall be calculated separately.

Article 2 Conditions for Settlement of Value-Added Tax for Land
1. The taxpayer shall settle value-added tax for land under any of the following circumstances:
(1) A real estate development project has been completed in full and sale has been made;
(2) A real estate development project the settlement of which has not been completed is transferred in whole;
(3) Land use right is directly transferred.
2. The competent taxation organ may require the taxpayer to settle value-added tax for land under any of the following circumstances:
(1) For real estate development projects having already been accepted upon completion, and the transferred floor area of real estate takes up more than 85% of the saleable floor area of the whole project, or although such proportion has not exceeded 85%, the remaining saleable floor area has been leased or personally used;
(2) Having obtained a sale (pre-sale) licence for three complete years but the sale has not yet been completed;
(3) The taxpayer applies for tax registration cancellation but has not yet gone through the formalities of settling land value-added tax;
(4) Other circumstances prescribed by provincial taxation organs.

Article 3 Determination of income of indirect sale and personal use of real estate
1.
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