China to advance real estate tax legislation

Technological support for collection process ready

China is drafting a real estate tax law, and debate on important issues and internal consultations are underway, a senior official said on Wednesday.

The move is part of a broader effort to curb speculation that has fueled overheating in the real estate sector, and the tax will raise the cost of holding property assets in certain cases.

The finance ministry and the national legislature will refer to common practices in other countries and regions when drafting the real estate tax law, Shi Yaobin, vice minister of finance, said at a press briefing on the sidelines of the ongoing two sessions in Beijing.

Meanwhile, China’s own specific conditions will also be taken into consideration, such as the need for integration of other related taxes and the reduction of the tax burden on property development and trading, he noted.

The launch of a real estate tax will have a huge impact on the property market, said Hu Yifan, chief China economist with UBS Wealth Management.

“It will help increase local fiscal revenue, and it will affect sales as the cost of holding property grows,” she told the Global Times on Wednesday.

According to the Government Work Report delivered on Monday, China will prudently advance real estate tax legislation.

Though time is still needed for the rollout of the real estate tax law, a national network for property information, which will support the levying of the tax, was completed in June 2017, Hu said.

“The tax may be collected in accordance with the assessed value of property. But it’s not exactly the case that the more expensive the property is, the more tax will be levied,” Yan Yuejin, a research director at the Shanghai-based E-house China R&D Institute, told the Global Times.

Considering the need to cut some taxes and fees, not all property owners will have to pay the tax, Yan said.

“For example, it may be stipulated that a family’s first house or properties below a certain level will not be taxed,” Hu noted.

Early in January 2011, Shanghai and Southwest China’s Chongqing carried out real estate tax pilot programs, and more first- and second-tier cities are expected to follow suit in the coming three years, Hu said.

Price growth in China’s property market appeared to peak in September 2017. In January this year, home prices in first-tier cities started to drop.