State Administration of Taxation, Issues Relevant to Enterprise Income Tax on Real Property Development Circular

Issued: July 9 2003
Effective: July 1 2003
Applicability: The Circular applies to all types of domestically invested property development enterprises and to other domestically invested enterprises engaged in property development (Section Six).

Main contents: Section One of the Circular explains how revenue from sales of developments should be determined depending on the method of sale. For example, revenue based on one-off payments or payment by instalments, rental first and sale later, etc. Section Two states how to determine income from pre-sales and gives the formula for calculating this. Section Three lists revenue that should be regarded as revenue from sales, such as when a development is used as foreign investment. Section Four explains how to determine revenue from construction and the provision of labour on behalf of another party. This depends on whether or not the construction and provision of labour is completed within 12 months. Section Five deals with deductions for costs and fees and lists what may or may not be deducted.
Related legislation: PRC Enterprise Income Tax Tentative Regulations, Dec 13 1993, CLP 1994 No.1 p9; PRC Enterprise Income Tax Tentative Regulations Implementing Rules, Feb 4 1994, CLP 1994 No.3 p8 and PRC Administration of Tax Collection Law (revised in April 2001), Apr 28 2001, CLP 2001 No.5 p12 & CLP 1995 No.3 p12