How Does The Tax Treatment Of Enterprises Invest In Land?

The twenty-fifth provision of the regulations on the implementation of enterprise income tax stipulates that the exchange of non monetary assets and the use of goods, property and labor in donation, debt repayment, sponsorship, fund-raising, advertising, sample, staff welfare or profit distribution shall be regarded as selling goods, pferring property or providing labor services, except where otherwise stipulated by the financial and tax authorities of the State Council.

The notice of the State Administration of Taxation on the disposition of assets income tax by enterprises (tax credit No. [2008]828) stipulates that assets belonging to enterprises should be made according to the same assets of enterprises.

The price determines the sales revenue; the assets that are purchased from abroad can be determined according to the price at the time of purchase.

The notice of the Ministry of Finance and the State Administration of Taxation on the issue of business tax related to the pfer of shares (fiscal and tax [2002]191) stipulates that since January 1, 2003, intangible assets and real estate investment have been invested into the stock market, participating in the allocation of profits from investors, and jointly undertaking the risk of investment. No business tax is levied.

No business tax is imposed on the pfer of shares.

The State Administration of Taxation

The notice of interpretation and stipulation on certain specific issues ([1991]155) stipulates that the scope of Taxation for the pfer of property ownership is based on the written evidence of the pfer of ownership of movable property and real property registered by government administrative organs, as well as the evidence of the pfer of ownership of enterprises.

The pfer contract for the right to the use of land is levied on the basis of the pfer of property rights.

The stamp duty is payable at the rate of 5/10000 at the time of the signing of the book of pfer of property rights.

The eighth provision of the Provisional Regulations on deed tax stipulates that the investment and share in the land and house ownership shall be regarded as the pfer of the right to the use of the land, the sale of the house or the taxation of the house donation.

However, the deed tax is paid by the investor.

Ministry of finance, state

The circular on some specific issues of land value-added tax (fiscal and taxation [1995]48) provides that when a party who invests or associates with real estate investment or associates to invest or pool as a joint venture in the form of land (real estate), the land value-added tax shall be temporarily exempted from the pfer of real estate to the invested and joint venture enterprises.

Land value-added tax shall be levied on investment and joint ventures for the reassignment of the above real estate.

However, the Circular of the Ministry of Finance and the State Administration of Taxation on certain issues concerning land value added tax (fiscal and tax [2006]21 No. fifth) stipulates the tax exemption for real estate investments or consortium. If the investment and joint venture enterprises engaged in real estate development or investment by real estate development enterprises or the real estate development enterprises are investing and co operating with the commercial housing they build, they are not applicable to the first circular of the Ministry of Finance and the State Administration of Taxation on the specific provisions of the land value-added tax ([1995]48).

According to the above provisions, the land pfer tax should be paid to the enterprises that invest in the real estate development.

If the invested enterprise is not engaged in real estate development, it will not pay the land value added tax.