State Administration of Taxation, Circular on Issues Relevant to the Administration of the Settlement of Land Value-added Tax on Real Property Developers

Issued: 28 December 2006
Effective: February 1 2007

Main Contents: Article 2 of the Circular states that real property developers shall settle land value-added tax (land VAT) when the construction of the real property development project is complete and the sales of the property units have been concluded; where there is a transfer of the entire real property development project on which construction has not yet been completed; or where there is a direct transfer of leasehold.

The competent tax authority may request a real property developer to settle land VAT in any of the following circumstances: (1) in the case of a completed real property development project that has undergone acceptance check, the floor area of the transferred property accounts for 85% of the sellable floor area of the entire project, or in the case such percentage is 85% or less, the remaining sellable floor area is leased out or occupied for self-use; (2) the sale has not been completed three years after the developer obtains the sales (pre-sales) permit; or (3) the taxpayer has applied for tax de-registration but has not yet handled the procedures to settle the land VAT.