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China may expand scope of real estate tax before May 20

By Yu Hongyan (chinadaily.com.cn)
Updated: 2010-05-14 15:49

China may issue regulations on widening the scope of the real estate tax (also known as property ownership tax) before May 20, an unnamed expert told the 21st Century Business Herald, but an official from the country's taxation bureau declined to comment on this matter.

The expert's remarks came after media reports saying that the Shanghai municipality would levy a real estate tax on residential properties. Currently only commercial properties are subject to such a tax in China.

It was reported that Shanghai would levy a 0.8 percent tax on ownership of properties that meet certain standards set by the municipal government.

However the expert close to the Administration of Taxation said the Shanghai municipal government would not make this move without the central government's approval, as local governments are not entitled to enlarge the collection range of the real estate tax, according to China's taxation law.

Another tax under heated discussion is the property tax, which is supposed to include a tax on land use in addition to the property ownership tax or the real estate tax. There is currently no such tax in China.

Widening the scope of the real estate tax would make it possible to skip the time-consuming legislative process of establishing the new property tax, said Hu Jinghui, vice president of 5i5j Real Estate Service.