OVERVIEW OF CHINA'S CURRENT TAX SYSTEM
Land Appreciation Tax
(1) Taxpayers
The taxpayers of Land Appreciation Tax include enterprises,
units, individual household businesses and other individuals
who receive income from a disposal or other means of transfer
with consideration of State-owned land use rights, buildings
on land and their attached facilities (hereinafter referred
to as transfer of real estate).
(2) Tax base and tax rates
The Land Appreciation Tax is based on the appreciation amount
derived by the taxpayer from the transfer of real estate, which
equals to the balance of proceeds received by the taxpayer on
the transfer of real estate after deducting the sum of deductible
items as prescribed.
The Land Appreciation Tax adopts four levels of progressive
rates;
Table of Land Appreciation Tax Rates
| Level |
Tax base |
Tax rates |
| 1 |
That part of the appreciation amount not exceeding 50%
of the sum of deductible items |
30% |
| 2 |
That part of the appreciation amount exceeding 50%,
but not exceeding 100%, of the sum of deductible items
|
40% |
| 3 |
That part of the appreciation amount exceeding 100%
, but not exceeding 200%, of the sum of deductible items
|
50% |
| 4 |
That part of the appreciation amount exceeding 200%
of the sum of deductible items |
60% |
(3) Computation of tax payable
To calculate the amount of Land Appreciation Tax payable, the
first step is to arrive at the appreciation amount derived by
the taxpayer from the transfer of real estate, which equals
to the balance of proceeds received by the taxpayer on the transfer
of real estate after deducting the sum of relevant deductible
items. Then the amount of tax payable shall be calculated respectively
for different parts of the appreciation by applying the applicable
tax rates in line with the percentages of the appreciation amount
over the sum of the deductible items. The sum of the amount
of tax payable for different parts of the appreciation shall
be the full amount of tax payable by the taxpayers. The formula
is:
Tax payable = S (Part of appreciation ×Applicable rate)
(4) Major exemptions
The Land Appreciation Tax shall be exempt in situations where
the appreciation amount on the sale of ordinary standard residential
buildings construction by taxpayers for sale does not exceed
20% of the sum of deductible items and when the real estate
is taken over or repossessed in accordance to the laws due to
the construction requirements of the State. |
