Shanghai Municipality, Circular on Issues Relevant to the Levy and Exemption of Land Value-added Tax on the Transfer of Non-ordinary Residential Premises by Individuals

(3) actual transaction price: less than 1.44 times the average transaction price of residential premises on land of the same class, less than Rmb17,500 per square metre where the premises are situated within the inner ring, less than Rmb10,000 per square metre where the premises are situated between the inner ring and outer ring, and less than Rmb7,000 per square metre where the premises are situated outside the outer ring.

Residential premises that do not satisfy the above criteria are non-ordinary residential premises.

In the case of transfer of non-ordinary residential premises by an individual who has lived in the premises for less than three years, land value-added tax (land VAT) shall be levied according to provisions. Where an individual has lived in the premises for at least three years but less than five years, he/she shall be entitled to a 50% reduction of land VAT (Article 2). Beginning from July 15 2007, in the case of transfer of non-ordinary residential premises by an individual where there is no appraisal price and he/she is unable to provide the invoice for purchase of the premises, land VAT shall be levied based on 0.5% of the income from the transfer if he/she has lived in the premises for less than three years. A 50% reduction of such land VAT may be granted if he/she has lived there for at least three years but less than five years (Article 3).

Related Legislation: Implementing Rules for the PRC Value-added Tax Tentative Regulations, January 27 1995, CLP 1995 No.3 p.23