Two property-related taxes may be merged
Two existing taxes on holders of real estate and users of urban land will be replaced by a property tax to be collected by local governments, the official Economic Information Daily reported.
No details were given about when the new tax would be established. China’s current property tax system is a hodgepodge of local taxes levied on construction, sales and holding of land and buildings.
The two taxes are based on area rather than market value. By comparison, the proposed new property tax on commercially used property would be based on market value, while the tax on residential property is not clear, the report said.
The two taxes, according to the Ministry of Finance, totaled 384.4 billion yuan ($60 billion) in 2014, accounting for 6.5 percent of local governments’ tax revenue.
The report said all new tax revenues would be assigned to local governments. It also said the new tax rate would be decided by local governments.