Nationwide Property Tax Likely to be Implemented by Next Year after Trials

Nationwide Property Tax Likely to be Implemented by Next Year after TrialsThe country is planning to introduce a nationwide property tax as early as next year once trials in Chongqing and Shanghai will be introduced. The National People’s Congress the top legislative body in China is expecting to wrap up the property tax law this year and set to implement it in 2015. Unlike the trial in Chongqing and Shanghai, the property tax is being levied on homes only and the planned national property tax will be targeting homes and land.

Although the method of taxation is still being discussed and is subject to several more changes as the NPC is asking for opinions form experts and tax authorities, especially on the ration of the tax which is still not being decided or whether the taxis to be levied on newly built properties on properties that are already owned. The new tax will combine several existing taxes which will include land tax on property developers and a tax for occupying arable land along with tax for house transactions.

During last year’s third plenary session, a pledge was made to speed up the enactment of the real estate tax as part of a much broader reform which also requires the speeding up of the enactment laws to improve the legitimacy of tax collection. China started to implement property taxes in Shanghai and Chongqing as pilot projects wherein a family in Shanghai with a home of more than 60 square meters per person will be taxed at a rate of .4 to .6 percent of the total annual property price. While in Chongqing the tax is focused on controlling investment speculation in high end properties as rate are set from .5 to 1.2 percent of the total annual property price.

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