Circular of the State Administration of Taxation on issues related to the liquidation and administra

         Circular of the State Administration of Taxation on issues related to the liquidation and administration of Land Value-added Tax of Real estate Development Enterprises

National Tax Distribution (2006) No. 187 2006-12-28

Note: This article has been revised by the Notice of the State Administration of Taxation on Revising Some Tax Normative Documents (Notice of the State Administration of Taxation No. 31, 2018).Local tax bureas of provinces, autonomous regions, municipalities directly under the Central Government and cities separately listed in the State Planning; State Tax Bureas of Tibet and Ningxia Autonomous Regions:

In order to further strengthen the liquidation and management of land value-added tax of real estate development enterprises, in accordance with the Law of the People's Republic of China on Tax Collection and Administration, the Provisional Regulations of the People's Republic of China on Land Value-added Tax and relevant provisions, the relevant issues are hereby notified as follows:

A unit of liquidation, land value-added tax

Land value-added tax for examination and approval of relevant departments of the state in real estate development projects for the unit to carry out the liquidation, for development projects in stages, with stage project settlement for the unit.

Where both ordinary and non-ordinary residential buildings are included in the development project, the value-added value shall be calculated separately.

Ii. Liquidation conditions of land value-added tax

(1) Taxpayers shall carry out the liquidation of land value-added tax under any of the following circumstances:

1. The real estate development project has been completely completed and sold;

2. The overall transfer of real estate development project is unfinished final accounts;

3. Direct transfer of land use rights.

(2) In any of the following circumstances, the competent tax authorities may require taxpayers to carry out land value-added tax liquidation:

1. For the completed and accepted real estate development project, the ratio of the transferred real estate floor area to the saleable floor area of the whole project is more than 85%, or the ratio does not exceed 85%, but the remaining salable floor area has been rented or used by the owner;

2. The sales (pre-sale) license has not been completed for three years;

3. Taxpayers apply for cancellation of tax registration but fail to go through the land value-added tax liquidation procedures;

4. Other circumstances stipulated by the provincial tax authority.

Determination OF INCOME FROM INDIRECT SALES AND SELF-USE REAL ESTATE

(a) real estate development enterprises will develop products for employee benefits, rewards, foreign investment, distribution to shareholders or investors, repaying debt, in exchange for other units and individuals of non-monetary assets, such as when the ownership transfer should be regarded as selling real estate, its income method and order confirmation according to the following:

1. Based on the average price of similar real estate sold by the enterprise in the same area and in the same year;

2. It shall be determined by the competent tax authorities with reference to the local market price or appraisal value of the same kind of real estate in the current year.

(2) real estate development enterprises will be part of the real estate development to commercial use for personal use or for renting, and etc., if the property is not shift, not land value-added tax, the tax is not listed in the event of liquidation income, do not deduct the corresponding costs and fees.

Iv. Deduction items of land value-added tax

(1) When a real estate development enterprise goes through the liquidation of land value-added tax, the amount of deduction related to the liquidation project shall be calculated in accordance with the provisions of Article 6 of the Interim Regulations on Land value-added Tax and Article 7 of the Detailed Rules for ITS implementation. Unless otherwise specified, deduct obtain land use rights, real estate development costs and expenses paid amount and related to the transfer of real estate tax, shall provide valid certificates; Those who cannot provide legal and valid vouchers shall not be deducted.

(2) If the documents or materials of the pre-project fees, construction and installation fees, infrastructure fees and development overhead fees attached by the real estate development enterprise to the land value-added tax liquidation office do not meet the liquidation requirements or are false, the tax authorities may refer to the construction and installation cost quota materials published by the local construction cost management department, and take into account the structure, use and location of the house and other factors. The amount standard per unit area of the above four development costs shall be verified and deducted accordingly. The specific verification method shall be determined by the provincial tax authorities.

(3) Public facilities such as residential committees and police stations, clubs, parking lots (warehouses), property management places, substations, heating stations, water plants, sports and sports venues, schools, kindergartens, nurseries, hospitals, posts and telecommunications and other public facilities developed and constructed by real estate development enterprises and supporting liquidation projects shall be handled according to the following principles:

1. If the property right belongs to all the owners after completion, the costs and expenses can be deducted;

2. If it is transferred to the government or public utilities for non-profit social public utilities free of charge after completion, its costs and expenses may be deducted;

3. In the case of a paid transfer after completion, the income shall be calculated, and the costs and expenses shall be deducted.

(4) If a real estate development enterprise sells houses that have been decorated, the decoration expenses may be included in the real estate development costs.

The withholding expenses of real estate development enterprises may not be deducted unless otherwise specified.

(5) For the costs and expenses common to multiple real estate projects, the deduction amount of the liquidation project shall be calculated and determined according to the proportion of the saleable building area of the liquidation project to the total saleable building area of the multiple projects or other reasonable methods.

Information to be submitted for land value-added tax liquidation

Taxpayers who meet the provisions of item (1) of Article 2 of this Notice shall, within 90 days from the date of meeting the conditions for liquidation, go through the liquidation formalities at the competent tax authorities; Taxpayers who comply with Item 2 (2) of Article 2 of this Notice shall go through the liquidation formalities within the time limit set by the competent tax authorities.

Taxpayers shall submit the following materials to settle the land value-added tax:

(1) Written application for liquidation of land value-added tax and land value-added tax returns of real estate development enterprises;

(2) The final statement of the completion of the project, the proof of the land price paid for the acquisition of the land use right, the contract for the transfer of the state-owned land use right, the bank loan interest settlement notice, the settlement statement of the project contract, the statistical table of the purchase and sale contract of the commodity house, and other supporting materials related to the income, cost and expense of the transfer of real estate;

(3) other certification materials related to the liquidation of land value-added tax as required by the competent tax authorities.

Taxpayers tax intermediary institutions entrusted to liquidation audit verification of the project, should also be submitted to the agency of the land value-added tax liquidation tax verification report issued.

Vi. Audit and verification of land value-added tax liquidation projects

When the tax intermediary is entrusted with the audit and authentication of the liquidation project, it shall issue an authentication report on the audit and authentication situation according to the format prescribed by the tax authority. The tax authorities may accept the verification report that meets the requirements.

The tax authorities shall put forward clear requirements for the tax intermediary institutions engaged in the land value-added tax liquidation verification work in terms of access conditions, working procedures, verification content, legal liabilities and other aspects, and do a good job in necessary guidance and management.

Verification AND COLLECTION of LAND VALUE-ADDED tax

Real estate development enterprises in any of the following circumstances, the tax authority may follow its development scale and income level of similar land value-added tax situation of local enterprises, according to the rate of not less than had of verification collection of land value-added tax:

(1) accounting books should be set up but have not been set up in accordance with the provisions of laws and administrative regulations;

(2) the destruction of books without authorization or refuses to provide tax information;

(3) Although accounting books are set up, the accounts are confused or the cost information, income vouchers and expense vouchers are incomplete, so that it is difficult to determine the transfer income or the deduction amount of the project;

(4) meet the requirements for the land value-added tax liquidation, and not in accordance with the stipulations of the liquidation procedures, within the time limit as prescribed by the tax authority instructs deadline liquidation, exceed the time limit still not of liquidation;

(5) the tax basis of the declaration is obviously low and there is no justifiable reason.

Eight, after the liquidation process of assignment of real property

If the real estate not transferred at the time of the liquidation of land value-added tax is sold or transferred after the liquidation, the taxpayer shall make the tax declaration of land value-added tax according to the provisions, and the deduction amount shall be calculated by multiplying the cost of the unit building area at the time of liquidation by the area sold or transferred.

Cost per unit building area = total amount deducted at the time of liquidation ÷ total building area cleared

This notice takes effect as of February 1, 2007. The tax authorities of each province may formulate specific liquidation administration measures in accordance with the provisions of this Notice and in light of the local actual conditions.

State Administration of Taxation

December 28, 2006