Couples' tax issue creates dilemma

Updated: 2011-08-30 09:03

By Wu Yiyao (China Daily)

  Comments() Print Mail Large Medium  Small 分享按钮 0

NANJING - To tax or not to tax is the question authorities in this city in East China must answer when deciding whether a partner in a couple must pay when adding his or her name to a property ownership certificate.

A spouse in a couple who wants to obtain part-ownership of a property, which belonged to the other partner before the marriage, by adding his or her name to the ownership certificate is currently not subject to contract tax, according to a notice released by Nanjing tax authorities on Sunday.

However, the notice contradicts one from Aug 23, which said a tax will be imposed on couples who want to complete the process.

The previous regulation said the tax will be charged at a rate of 3 percent of the evaluated price of the transferee's share of the property. It will only apply to the portion of a property that belongs to a partner in a couple who does not have his or her name on the property's ownership certificate.

The regulations released on Aug 23 were based on the latest interpretations of the Marriage Law enacted on Aug 13, which stipulates that real estate bought before marriage by one partner in a couple belongs to that partner alone. Adding the name of the other partner to the ownership certificate aims to shift part of the ownership of the property and should be subject to contract law.

The regulations immediately sparked heated discussion, with some critics saying the policy amounted to "looting".

On Aug 24, the tax authorities in Nanjing said the introduction of the tax would be suspended as detailed policies were yet to be formulated and announced by the State Administration of Taxation.

On Aug 25, however, the administration responded that no discussion and research were conducted on such a tax.

The State Administration of Taxation said a tax on the process of adding a spouse's name to the ownership of a property purchased before marriage was a decision for local authorities, and similar decisions were unlikely to be implemented across the country.

"It feels like the tax authorities are playing games and letting us guess when the tax will be imposed," said a Nanjing resident surnamed Gong.

Nanjing is not the only city that has tried to impose taxes on couples who shift the ownership of property by adding a name to the certificate. Chengdu in Sichuan province and Qingdao in Shandong province have adopted similar policies.

Wuhan, capital of Hubei province, imposed a tax rate of 4 percent while other cities chose a rate of 3 percent.

The decision on the rate is based on conditions in different places, and the figure of 4 percent was a reasonable rate, according to Wuhan tax authorities. In Shanghai, a fee of 100 yuan ($16) is charged for the same process.

Hu Yijian, a professor at Shanghai University of Finance and Economics, said a unified interpretation which can be applied all over the country should be formulated before any tax is charged.

"Without a unified explanation and detailed policy on such taxes, local tax officials will face the dilemma of abusing their power or failing to abide by the law," said Hu.