Expert tips for Yijiu:

The main contents of this paper are:

1. Detailed introduction of land value-added tax related: income recognition, deduction, tax rate, tax exemption policy;

2. Land VAT liquidation policy;

3. 3 cases related to land value-added tax;

Beneficial presenter:

Enterprises and individuals involved in land value-added tax.

Beneficial industries:

Real estate development enterprises.

Benefits:

Land value-added tax.

Expert suggestion:

Land value-added tax is relatively complex in the collection of real objects, and it is the only tax that needs to be reviewed and confirmed by the tax authorities, so the tax risk is relatively large; Real estate enterprises can contact us if they need advice on tax compliance and land value-added tax settlement;

Land VAT calculation, detailed explanation of multiple cases

1、 Taxpayer

Taxpayers of land value-added tax are units and individuals that transfer the right to use state-owned land, buildings on the ground and their attachments with compensation. Including all kinds of enterprises, institutions, government organs, social organizations, individual businesses and other units and individuals. Key points: the use right of state-owned land (not collected collectively), paid (not collected for inheritance and gift), and transferred (not collected for lease) are also applicable to foreign-related enterprises, units and individuals.

2、 Taxable object

The tax object of land value-added tax is the value-added amount obtained from the transfer of state-owned land use right, buildings on the ground and their attachments. The value added shall be the balance of the taxpayer's income from the transfer of real estate minus the amount of items deducted as prescribed in the Regulations. Income refers to the economic benefits related to the transfer of real estate, not only monetary income.

3、 Revenue recognition

（1） The income includes the total price of real estate transfer and relevant economic benefits.

What are the tax items of real estate appraisal?

In tax collection, real estate assessment is required for the following cases:

(1) Selling old houses and buildings;

(2) Concealing or falsely reporting the transaction price of real estate;

(3) The amount of deducted items provided is not true;

(4) The transaction price of the transferred real estate is lower than the appraisal price of the real estate without any justified reason.

（2） Article 1 of the Notice of the State Administration of Taxation on Issues Related to the Settlement of Land Value Added Tax (GSH [2010] No. 220) stipulates that when the land value added tax is settled, if the commercial housing sales invoice has been issued in full, the revenue shall be recognized according to the amount contained in the invoice; If no invoice has been issued or the invoice has not been issued in full, the income shall be recognized based on the amount of house sales and other income specified in the sales contract signed by both parties. If the area of the commercial housing specified in the sales contract is inconsistent with the actual area measured by the relevant department, and the house compensation or refund has occurred before the liquidation, it shall be adjusted when calculating the land value-added tax.

（3） According to Paragraph 1 of Article 1 of the Announcement of the State Administration of Taxation on Several Provisions on the Collection and Administration of Land Value Added Tax after the Business Tax to VAT (Announcement No. 70 of the State Administration of Taxation in 2016), after the business tax to VAT, the taxable income of land value added tax on the transfer of real estate by taxpayers does not include VAT.

According to Article 3 of the Notice of the Ministry of Finance and the State Administration of Taxation on the Basis of Individual Income Tax Calculation of Deed Tax, Real Estate Tax, Land Value Added Tax after the Business Tax to VAT (CS [2016] No. 43), the income of land value added tax taxpayers from transferring real estate is exclusive of VAT.

4、 Deductions

（1） The amount paid for obtaining the land use right.

（2） The cost of real estate development includes land acquisition and demolition compensation, preliminary engineering cost, construction and installation cost, infrastructure cost, public facilities supporting cost, and indirect development cost. These costs are allowed to be deducted according to the actual amount incurred.

Note: According to Article 5 of the Announcement of the State Administration of Taxation on Several Provisions on the Collection and Administration of Land Value Added Tax after the replacement of business tax with VAT (Announcement No. 70 of the State Administration of Taxation in 2016), after the replacement of business tax with VAT, land value added tax taxpayers receive VAT invoices obtained from construction and installation services, The name of the county (city, district) where the construction services occur and the name of the project shall be indicated in the remark column of the invoice in accordance with the provisions of the Announcement of the State Administration of Taxation on the Administration of Tax Collection Related to the Comprehensive Implementation of the Pilot Program of Replacing Business Tax with Value added Tax (No. 23 Announcement of the State Administration of Taxation in 2016), otherwise it shall not be included in the amount of land value-added tax deductions.

（3） Real estate development expenses

It refers to sales expenses, administrative expenses and financial expenses.

1. The interest expense in the financial expenses, if it can be calculated and apportioned according to the transferred real estate project and provided with the certificate of the financial institution, can be deducted according to the facts, but the maximum amount cannot exceed the amount calculated according to the loan interest rate of the same period of the commercial bank. The real estate development expense shall be deducted within 5% of the sum of the amount paid for the land use right and the real estate development cost.

2. If the financial institution can not provide the certificate, the interest will not be deducted separately, and the deduction of the three expenses will be calculated and deducted according to the amount paid for obtaining the right to use and within 10% of the real estate development cost.

（4） Appraisal price of old houses and buildings.

It refers to the value of the replacement cost appraised by the real estate appraisal agency approved by the government multiplied by the depreciation discount rate when transferring the used houses and buildings, and the price confirmed by the local tax authority with reference to the appraisal of the appraisal agency.

According to Paragraph 1 of Article 2 of the Notice of the Ministry of Finance and the State Administration of Taxation on Several Issues Concerning Land Value added Tax (CS [2006] No. 21), where taxpayers transfer old houses and buildings, if they cannot obtain the appraisal price but can provide the purchase invoice, the amount of deduction items specified in Items 1 and 3 of Article 6 of the Regulations shall be confirmed by the local tax department, It can be calculated based on the amount stated in the invoice and an additional 5% per year from the year of purchase to the year of transfer. For the deed tax paid by taxpayers when purchasing houses, if they can provide the deed tax payment voucher, it is allowed to be deducted as "taxes related to the transfer of real estate", but not as the base for adding 5%.

（5） Taxes related to the transfer of real estate

It refers to the business tax, urban maintenance and construction tax and stamp tax paid when the real estate is transferred. The education surcharges paid due to the transfer of real estate can also be deducted as taxes. Note that VAT is not included after the replacement of business tax with VAT.

（6） Other deductions specified by the Ministry of Finance

1. Add and deduct. For taxpayers engaged in real estate development, 20% of the sum of the amount paid for obtaining the land use right and the cost of real estate development can be deducted.

2. Deduction of collection fees. For the various fees that the people's government at or above the county level requires real estate development enterprises to collect when selling houses, if the fees collected are included in the house price and collected from the buyer, they can be used as the income from the transfer of real estate for tax purposes; If the collection fee is not included in the house price but is charged separately from the house price, it may not be regarded as the income from the transfer of real estate. If the collected expenses are taxed as the transfer income, they can be deducted when calculating the amount of the deducted items, but they are not allowed to be used as the base for 20% deduction; If the collection fee is not taxed as the income from the transfer of real estate, it is not allowed to deduct the collection fee when calculating the value-added.

5、 Tax rate

The land value-added tax adopts a four level progressive tax rate, with the minimum tax rate of 30% and the maximum tax rate of 60%. The over rate progressive tax rate is based on the relative rate of the amount of the tax object as the progressive basis, and the applicable tax rate is calculated and determined according to the over accumulation method. When determining the applicable tax rate, it is first necessary to determine the relative rate of the amount of the tax object. That is to say, the ratio (value-added rate) between the value-added amount and the amount of the deducted items is divided into four levels from low to high: that is, the part of the value-added amount that does not exceed 50% of the amount of the deducted items; The value added exceeds 50% but does not exceed 100% of the amount of the deducted items; The value added exceeds 100% but does not exceed 200% of the deducted items; If the value added exceeds 200% of the amount of the deducted items, the tax rates of 30%, 40%, 50% and 60% shall apply respectively. The proportion that the value added of each level in the progressive tax rate of 4 levels of excess rate of land value-added tax does not exceed the amount of deducted items includes this proportion.

6、 Main tax relief policies

（1） Land value-added tax will be exempted if the value-added rate of ordinary housing sales does not exceed 20%

According to the provisions of the Interim Regulations on Land Value Added Tax and the Detailed Rules for the Implementation of the Interim Regulations on Land Value Added Tax, if taxpayers build ordinary standard houses for sale and the value-added rate does not exceed 20%, the land value added tax will be exempted. The term "ordinary standard residence" refers to the residence built according to the standard of ordinary civil residence in the locality.

High class apartments, villas and resorts are not ordinary standard residences. According to the provisions of the Notice of the General Office of the State Council on Forwarding the Opinions of the Ministry of Construction and Other Departments on the Work of Stabilizing Housing Prices (GBF [2005] No. 26), ordinary standard residential buildings should simultaneously meet the following requirements: the floor area ratio of residential communities should be more than 1.0; The single building area is less than 120 square meters; The actual transaction price is 1.2 times lower than the average transaction price of housing on the same level of land.

The specific standard for ordinary housing of provinces, autonomous regions and municipalities directly under the Central Government may be appropriately raised, but shall not exceed 20% of the above standard. The first two conditions are easy to confirm. Now the problem lies in the identification of the third condition: that is, the actual transaction price is 1.2 (1.44) times lower than the average transaction price of housing on the same level of land. However, most county-level tax authorities do not have the announcement or notice of the "average transaction price of housing on land of the same level" for reference.

For taxpayers who build ordinary standard houses and engage in other real estate development, the value-added shall be accounted for separately. If the added value is not accounted for separately or cannot be accurately accounted for, the ordinary standard residential buildings built by them cannot apply this exemption provision.

（2） Individual sales of housing are exempt from land value-added tax

According to Article 12 of the Detailed Rules for the Implementation of the Interim Regulations of the People's Republic of China on Land Value Added Tax, if an individual transfers his or her original house for personal use due to job transfer or improvement of living conditions, he or she will be exempted from land value added tax if he or she has lived for five years or more after reporting to the tax authority for approval; For those who have lived for three to five years, the land value added tax shall be levied by half. For those who have lived for less than three years, land value-added tax shall be levied according to regulations.

According to the Notice of the Ministry of Finance and the State Administration of Taxation on the Provisions on Some Specific Issues of Land Value added Tax (Cai Shui Zi [1995] No. 48), the exchange of self owned residential real estate between individuals can be exempted from land value added tax after verification by the local tax authorities. Real Estate Finance and Taxation WeChat 15911054682

According to the Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Tax Policies in the Real Estate Transaction (CS [2008] No. 137), the land value added tax is temporarily exempted for individual housing sales. That is, the houses sold by individuals, whether ordinary houses or non ordinary houses, whether the first house or two or more houses, are exempt from land value-added tax. Note: Only residential houses owned by individuals. Other personal real estate, such as shops, office buildings, garages and basements transferred separately, are not included in the tax exemption scope.

（3） Land VAT exemption for government relocation

For the needs of national construction, the compensation income from the real estate expropriated and recovered by the government according to law or the relocation due to the needs of urban planning and national construction, if the original real estate is transferred by the taxpayer himself, the land value-added tax shall be exempted.

According to Article 8 of the Interim Regulations on Land Value Added Tax, real estate that is expropriated and recovered according to law for national construction is exempted from land value added tax. Article 11 of the Detailed Rules for the Implementation of the Interim Regulations on Land Value Added Tax further stipulates that the real estate expropriated and recovered according to law for the needs of national construction refers to the real estate expropriated or the land use right recovered with the approval of the government for the needs of urban planning and national construction.

According to the Notice of the Ministry of Finance and the State Administration of Taxation on Several Issues Concerning Land Value added Tax (CS [2006] No. 21), relocation due to "urban implementation planning" refers to the transformation of old cities or the pollution and disturbance of residents caused by enterprises (refers to the generation of excessive exhaust gas, wastewater, waste residue and noise, which will cause certain harm to the life of urban residents), The government or the relevant competent department of the government shall determine the relocation according to the approved urban planning; Relocation due to "the need of national construction" refers to the relocation due to the implementation of construction projects approved by the State Council, provincial people's governments and relevant ministries and commissions of the State Council.

Units and individuals that meet the above tax exemption provisions must apply for tax exemption to the local tax authority where the real estate is located. After examination and verification by the tax authority, they will be exempted from land value-added tax.

（4） The unit transfers the old house as the public rental housing source, and the value-added rate does not exceed 20%, so the land value-added tax is exempted

According to the provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Preferential Tax Policies for Public Rental Housing (CS [2015] No. 139), enterprises, public institutions, social organizations and other organizations that transfer old houses as a source of public rental housing, and the value added does not exceed 20% of the deducted project amount, are exempted from land value-added tax. The public rental housing enjoying the above preferential tax policies refers to the public rental housing incorporated into the public rental housing development plan and annual plan approved by the people's governments of provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan and the Xinjiang Production and Construction Corps, and managed in accordance with the Guiding Opinions on Accelerating the Development of Public Rental Housing (JB [2010] No. 87) and the specific management methods formulated by the municipal and county people's governments. The implementation period of the preferential policy is from January 1, 2016 to December 31, 2018.

（5） The land value added tax will be exempted if the old house is transferred as the indemnificatory housing and the value added does not exceed 20% of the deducted project amount

According to the provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Relevant Tax Policies for the Reconstruction of Shantytown Areas (CS [2013] No. 101), if enterprises, institutions, social organizations and other organizations transfer old houses as housing resources for reconstruction and resettlement, and the value added does not exceed 20% of the deducted project amount, land value added tax will be exempted.

（6） Land value-added tax will not be levied temporarily for enterprise merger and reorganization

According to the Notice on Continuing to Implement the Land Value Added Tax Policies Related to Enterprise Restructuring (CS [2018] No. 57), non corporate enterprises are restructured into limited liability companies or joint stock limited companies as a whole, and limited liability companies (joint stock limited companies) are restructured into joint stock limited companies (limited liability companies) as a whole Land value-added tax shall not be levied temporarily for enterprises whose buildings and attachments on the ground (hereinafter referred to as real estate) have been transferred or changed to the restructured ones. According to the law or the contract, if two or more enterprises are merged into one enterprise and the original enterprise's investment subject is still in existence, the original enterprise will not be subject to land value-added tax for transferring or changing the real estate to the merged enterprise. According to the law or the contract, the enterprise is divided into two or more enterprises with the same investment subject as the original enterprise, and the original enterprise transfers or changes the real estate to the separated enterprise, the land value-added tax will not be collected temporarily. Units and individuals invest in real estate at the price of real estate when restructuring, and land value added tax will not be levied temporarily for the enterprises that transfer or change their real estate to the invested enterprises. The above-mentioned land value-added tax policies related to restructuring and reorganization are not applicable to the case where either party of the real estate transfer is a real estate development enterprise. The term "not changing the original enterprise's investment subject and the investment subject are the same" as mentioned in this notice refers to that the investor does not change before and after the enterprise restructuring and reorganization, and the investor's contribution proportion can change; The existence of the investor means that the original investor of the enterprise must exist in the enterprise after restructuring, and the proportion of the investor's investment may change. The implementation period is from January 1, 2018 to December 31, 2020.

（7） Land value-added tax is temporarily exempted for cooperative building and housing distribution as self use

According to the Regulations of the Ministry of Finance and the State Administration of Taxation on Some Specific Issues Concerning Land Value added Tax