Circular of the State Administration of Taxation on Printing and Distributing the Measures for the Handling of Enterprise Income Tax on Real Estate Development and Operation
Circular of the State Administration of Taxation on Printing and Distributing the Measures for the Handling of Enterprise Income Tax on Real Estate Development and Operation
Circular of the State Administration of Taxation on Printing and Distributing the Measures for the Handling of Enterprise Income Tax on Real Estate Development and Operation
Guo Shui Fa [2009] No. 31
March 6, 2009
State taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:
With the view of strengthening the administration of income tax imposition on enterprises engaging in real estate development and operation, regulating the taxation of enterprises engaging in real estate development and operation, in accordance with relevant provisions of laws and administrative regulations on taxation such as Law of the People's Republic of China on Enterprise Income Tax and its implementing regulations and Law of the People's Republic of China on the Administration of Tax Levying and its implementing detailed rules, etc., in line with the characteristics of real estate development and operation, Measures for Handling Enterprise Income Tax on Real Estate Development and Operation has been formulated by the State Administration of Taxation, and now is printed and distributed to you for your compliance.
Measures for Handling Enterprise Income Tax on Real Estate Development and Operation
Chapter I General Provisions
Article 1 This Measures for Handling Enterprise Income Tax on Real Estate Development and Operation (this "Measures") has been formulated in accordance with relevant provisions of laws and administrative regulations on taxation such as Law of the People's Republic of China on Enterprise Income Tax and its implementing regulations and Law of the People's Republic of China on the Administration of Tax Levying and its implementing detailed rules, etc..
Article 2 This Measures applies to enterprises engaging in real estate development and operation within the territory of China (hereinafter referred to as "Enterprise").
Article 3 Real estate development and operation of a enterprise includes land development, construction and sale of development products such as residence, commercial occupancy and other buildings, attachments and supporting facilities etc.. Any development product other than development of land meeting one of the following conditions shall be deemed as a completed development product:
1. The certificate of project completion of the development product has been submitted to real estate management department.
2. The development product has been put into use.
3. The development product has obtained the certificate of initial property right.
Article 4 Where any circumstance as stipulated in article 35 of Law of the People's Republic of China on the Administration of Tax Levying occurs in an enterprise, taxation authority may collect, manage and gradually regulate its previous payable income tax by means of verified collection, and meanwhile handle in accordance with the provisions of tax laws and administrative regulations such as the Law of the People's Republic of China on the Administration of Tax Levying, but shall not determine enterprise income tax in advance to collect or administrate by means of verified collection.
Chapter II Tax Treatment concerning Incomes
Article 5 Sales incomes of a development product cover all payments obtained from the sale of the development product including cash, cash equivalents and other economic interests. Various funds, expenses and additional charges charged by an enterprise on behalf of relevant departments, units and enterprises, where they are included in the sales price of the development product or invoices thereof are issued by the enterprise, shall all be deemed as sales incomes in accordance with the stipulations; and where they are not included in the sales price of the development product and invoices thereof are issued by charging departments and units other than the enterprise, they may be managed as collected and remitted funds.
Article 6 Income obtained by an enterprise from the execution of Sales Contract of Real Estate or Pre-sale Contract of Real Estate in due form shall be confirmed to be sales income, and shall be confirmed according to the following provisions:
1. Where the development product is sold by means of lump sum, the income shall be confirmed on the date of actually receiving the payment or obtaining the certificate (right) of claiming such payment.
2. Where the development product is sold by means of installments, the income shall be confirmed by the price and payment day as stipulated in the sales contract or agreement. Where a payer pays in advance, the income shall be confirmed on the very day of such payment.
3. Where the development product is sold by means of bank mortgage, the income shall be confirmed by the price as stipulated in the sales contract or agreement. The down-payment shall be confirmed on the very day of receiving such payment, and the residual payment shall be confirmed on the day of handling the transfer of bank mortgage loans.
4. Where the development product is sold by means of entrustment, the incomes shall be confirmed according to the following principles:
(1) Where the development product is entrusted to an agent to be sold by paying commission, the income shall be confirmed by the price as stipulated in the sales contract or agreement on the very day of receiving the list of development products sold by the agent.
(2) Where the development product is entrusted to be sold by means of buyout, if it is the enterprise and the purchaser that enter into a sales contract or agreement or it is the enterprise, the agent and the purchaser that jointly enter into a tripartite sales contract or agreement, and if the price as stipulated in the sales contract or agreement is higher than the buyout price, the income shall be confirmed by the payment calculated according to the price as stipulated in the sales contract or agreement on the day of receiving the list of development products sold by the agent; if the price as stipulated in the sales contract or agreement under the two aforementioned circumstances is lower than the buyout price and if it is the agent and the purchaser that enter into the sales contract or agreement, the income shall be confirmed by the price calculated according to the buyout price on the day of receiving the list of development products sold by the agent.
(3) Where the development product is entrusted to be sold by base price (minimum price) and profit in excess of base price is shared by the parties thereto, if it is the enterprise and the purchaser that enter into a sales contract or agreement, or if it is the enterprise, the agent, and the purchaser that jointly enter into a tripartite sales contract or agreement, and if the price as stipulated in the sales contract or agreement is higher than the base price, the income shall be confirmed by the payment calculated according to the price as stipulated in the sales contract or agreement on the day of receiving the list of development products sold by the agent, and the amount of profit sharing paid according to the stipulations by the enterprise to the agent shall not be directly deducted from the sales income; and if the price as stipulated in the sales contract or agreement is lower than the base price, the income shall be confirmed by payment calculated according to the base price on the day of receiving the list of development products sold by the agent.
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