Shanghai levies individual land VAT

Updated: 2007-06-15 10:55

The Shanghai Municipal Local Taxation Bureau issued a circular yesterday, stipulating that starting from July 15 it would levy value added tax (VAT) on non-ordinary housing sold by individuals, according International Finance News.

Non-ordinary housing includes public houses that become individual-owned after the housing reform, houses built via fund raising, and economically affordable houses, among others.

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According to the circular, an individual who sells non-ordinary housing after living in it for more than five years will be exempted from the VAT. If he lives in the housing for three to five years, he has to pay half the VAT; and less than three years, a VAT 0.5 percent of the proceeds from the transaction.

Shi Hongrui, general manager of Shanghai Hanyu Property Agency Limited, said the new VAT policy would not have immediate impact on the real estate industry, so the housing turnover will not decrease in the short term. However, the new VAT can help to make housing prices more stable, he added.

In another development, the local taxation bureau yesterday also transmitted two circulars from the Ministry of Finance and the State Administration of Taxation. As a temporary practice, the circulars impose a 1 percent prepaid VAT on commodity houses sold by real estate companies, while low- and medium-price housing does not fall into this category of regulation.

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