Announcement of the State Administration of Taxation on Promulgating the Interim Administrative Measures for the Collection of Value-added Tax on the Sale of Self-developed Real Estate Projects by Real Estate Developers

　　Announcement of the State Administration of Taxation [2016] No.18

　　March 31, 2016

　　The State Administration of Taxation ("SAT") has formulated the Interim Administrative Measures for the Collection of Value-added Tax on the Sale of Self-developed Real Estate Projects by Real Estate Developers, which are hereby released and become effective as of May 1, 2016.

　　The Announcement is hereby given.

　　Interim Administrative Measures for the Collection of Value-added Tax on the Sale of Self-developed Real Estate Projects by Real Estate Developers

　　Chapter I Scope of Application

　　Article 1 These Interim Administrative Measures for the Collection of Value-added Tax on the Sale of Self-developed Real Estate Projects by Real Estate Developers (hereinafter referred to as these "Measures") are formulated in accordance with the Circular of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (Cai Shui [2016] No.36) as well as the current provisions on value-added tax ("VAT").

　　Article 2 These Measures shall apply to the sale of self-developed real estate projects by real estate developers.
　　Self-development refers to the construction of infrastructures and houses on the land for which the land use right is obtained in accordance with the law.

　　Article 3 The sale by real estate developers in their own name of unfinished real estate projects that are purchased by them by means of acceptance or otherwise after further development falls within the scope of the sale of self-developed real estate projects prescribed in these Measures.

　　Chapter II Levying Administration of General Taxpayers

　　Section 1 Sales Amount

　　Article 4 In case that a real estate developer recognized as a general taxpayer (hereinafter referred to as the "general taxpayer") sells a self-developed real estate project, the general tax calculation method shall be adopted, and the obtained total consideration and other charges after the deduction of the corresponding land price of the real estate project sold for the current period shall be taken as the sales amount, for which the calculation formula is listed below:
　　Sales amount = (total consideration and other charges – land price deductible for the current period) / (1 + 11%)

　　Article 5 The land price deductible for the current period shall be calculated according to the following formula:
　　Land price deductible for the current period = (gross floor area of a real estate project sold for the current period / saleable area of a real estate project) × land price paid
　　The gross floor area of a real estate project sold for the current period refers to the gross floor area corresponding to the VAT sales amount specified in the tax return filed for the current period.
　　The saleable area of a real estate project refers to the saleable gross floor area of a real estate project, excluding the gross floor area of the auxiliary public facilities whose price is not settled separately when the real estate project is sold.
　　The land price paid refers to the land price directly paid to the government, land administrations or the organizations entrusted by the government to collect the land price.

　　Article 6 The deduction of the land price from the obtained total consideration and other charges in the calculation of the sales amount shall be subject to the obtainment of the financial notes issued (printed) under the supervision by financial authorities at or above the provincial level.

　　Article 7 A general taxpayer shall establish a ledger to record the information on land price deduction, the amount of which shall not exceed the land price actually paid by the taxpayer.

　　Article 8 Where a general taxpayer sells old self-developed real estate projects, it may elect to adopt the simple calculation method and be taxed at a levy rate of 5%. Once the simple tax calculation method is adopted, it shall not be changed to the general tax calculation method for tax calculation within 36 months.
　　An old real estate project refers to:
　　1. the real estate project whose contract commencement date specified in the Construction Permit for Construction Projects is on or before April 30, 2016; and
　　2. the construction project for which no contract commencement date is specified in the Construction Permit for Construction Projects or no Construction Permit for Construction Projects is obtained but the commencement date specified in the contracting agreement for the construction project is on or before April 30, 2016.

　　Article 9 In case that the sale of an old self-developed real estate project by a general taxpayer is subject to tax under the simple tax calculation method, the sales amount shall be the obtained total consideration and other charges with no corresponding land price deducted.

　　Section 2 Prepaid Tax

　　Article 10 In case that a general taxpayer sells a self-developed real estate project by receiving advanced payment, such taxpayer shall prepay VAT at a pre-payment rate of 3% upon receipt of the advanced payment.

　　Article 11 The tax pre-payable shall be calculated according to the following formula:
　　Tax pre-payable = advanced payment / (1 + applicable tax rate or levy rate) × 3%
　　In case that the general tax calculation method applies, the tax pre-payable shall be calculated at an applicable rate of 11%; in case that the simple tax calculation method applies, such tax shall be calculated at a levy rate of 5%.

　　Article 12 A general taxpayer shall prepay tax to the competent SAT office within the tax declaration period for the month following the month when the advanced payment is received.

　　Section 3 Input Tax

　　Article 13 In case that the nondeductible input tax on the sale of a self-developed real estate project by a general taxpayer cannot be defined due to the comprehensive application of the general tax calculation method and the simple tax calculation method and VAT exemption, the said nondeductible input tax shall be defined based on the "construction scale" specified in the Construction Permit for Construction Projects.
　　Nondeductible input tax = total input tax nondeductible for the current period × (construction scale of the real estate project to which the simple tax calculation method applies or which is exempted from tax / general construction scale of the real estate project)

　　Section 4 Filing of Tax Returns

　　Article 14 In case that the general tax calculation method applies to the sale of a self-developed real estate project by a general taxpayer, the taxpayer shall calculate the tax payable for the current period based on the current sales amount and at an applicable rate of 11% at the time for tax payment as prescribed in Article 45 of the Implementing Measures for the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (issued in Cai Shui [2016] No.36, hereinafter referred to as the "Implementing Measures"), and then file a tax return with the competent SAT office after deducting the prepaid tax. Any surplus after deduction shall be carried forward to the next period for further deduction.

　　Article 15 In case that the simple tax calculation method applies to the sale of a self-developed real estate project by a general taxpayer, the taxpayer shall calculate the tax payable for the current period based on the current sales amount and at an applicable rate of 5% at the time for tax payment as prescribed in Article 45 of the Implementing Measures, and then file a tax return with the competent SAT office after deducting the prepaid tax. Any surplus after deduction shall be carried forward to the next period for further deduction.

　　Section 5 Issue of Invoices

　　Article 16 A general taxpayer selling self-developed real estate projects shall issue VAT invoices by itself.

　　Article 17 In case that a general taxpayer selling a self-developed real estate project has received the advanced payment and declared and paid business tax ("BT") on such payment to the competent local taxation bureau by April 30, 2016 but has not issued BT invoice, it may issue general VAT invoices rather than special VAT invoices .

　　Article 18 No special VAT invoice is allowed to be issued for any self-developed real estate project sold by a general taxpayer to other individuals.

　　Chapter III Levying Administration of Small-scale Taxpayers

　　Section 1 Prepaid Tax

　　Article 19 In case that a real estate developer recognized as a small-scale taxpayer (hereinafter referred to as the "small-scale taxpayer") sells a self-developed real estate project by receiving advanced payment, such taxpayer shall prepay VAT at a pre-payment rate of 3% upon receipt of the advanced payment.

　　Article 20 The tax pre-payable shall be calculated according to the following formula:
　　Tax pre-payable = advanced payment / (1 + 5%) × 3%

　　Article 21 A small-scale taxpayer shall prepay tax to the competent SAT office within the tax declaration period for the month following the month when the advanced payment is received or the tax payment period determined by the competent SAT office.

　　Section 2 Filing of Tax Returns

　　Article 22 A small-scale taxpayer selling a self-developed real estate project shall calculate the tax payable for the current period based on the current sales amount and at a levy rate of 5% at the time for tax payment as specified in Article 45 of the Implementing Measures, and then file a tax return with the competent SAT office after deducting the prepaid tax. Any surplus after deduction shall be carried forward to the next period for further deduction.

　　Section 3 Issue of Invoices

　　Article 23 A small-scale taxpayer selling a self-developed real estate project shall issue general VAT invoices by itself. If a purchaser requires a special VAT invoice, the small-scale taxpayer shall apply to the competent SAT office to issue such invoice on its behalf.

　　Article 24 In case that a small-scale taxpayer selling a self-developed real estate project has received the advanced payment and declared and paid BT on such payment to the competent local taxation bureau by April 30, 2016 but has not issued BT invoice, it may issue general VAT invoices and may not apply to issue special VAT invoices on its behalf .

　　Article 25 No application for the issue of special VAT invoices is allowed for any self-developed real estate project sold by a small-scale taxpayer to another individual.

　　Chapter IV Miscellaneous

　　Article 26 A real estate developer selling a self-developed real estate project shall fill in the Statement of Value-added Tax Prepayments when prepaying the tax in accordance with these Measures.

　　Article 27 If a real estate developer deducts the tax payable from the prepaid tax, the tax payment vouchers shall be used as the legal and valid certificate.

　　Article 28 If a real estate developer selling a self-developed real estate project fails to prepay or pay any tax in accordance with these Measures, the competent SAT office shall handle the issue in accordance with the Law of the People's Republic of China on the Administration of Tax Levying and the relevant provisions.