Provisional Regulations on Urban Real Estate Tax

Article 1 Unless otherwise stipulated, Urban Real Estate Tax shall be collected by the taxation authorities according to the provisions of these Regulations. (Currently, for enterprises with foreign investment, foreign enterprises and foreign nationals , only housing property has a tax levy, land property has no tax levy).

Article 2 The Ministry of Finance of the Central People's Government shall designate the cities in which Real Estate Tax shall be levied; the tax shall not be levied in cities not so designated. (The localities which levy tax shall be determined by the People's Governments at the provincial level)

Article 3 The owner of property shall be liable for the payment of Real Estate Tax. Where the property is under mortgage, the mortgagee shall be liable for payment. Where the owner and the mortgagee are not present in the locality where the real estate is situated, where ownership of the property has not been established or where disputes over tenancy and mortgage of the property have not been resolved, the tax shall be paid by the custodian or the user of the property on behalf of the owner or mortgagee.

Article 4 The following categories of real estate shall be exempt from Real Estate Tax:
A. real estate owned by military units, government agencies and social organizations for their own use;
B. real estate owned by public schools and registered private schools for their own use;
C. real estate used as a park, scenic spot or historic site or for other public purposes;
D. real estate used exclusively by mosques or lamaseries;
E. real estate used exclusively by temples of other religions for which tax exemption has been granted by the People's Government at the provincial (municipal) level or higher.

Article 5 Reductions or exemptions from Real Estate Tax shall be granted to the following categories of real estate:
A. newly-constructed buildings shall be exempt from Real Estate Tax for a period of three years starting in the month when construction is completed;
B. renovated buildings where the renovation expenses exceed one half the construction expenses for such a building, shall be exempt from Real Estate Tax for a period of two years starting in the month in which the renovations were completed;
C. other real estate which, due to special circumstances, the People's Government at the provincial (municipal) level or higher has granted reductions of exemption from Real Estate Tax.

Article 6 Real Estate Tax shall be assessed on the following criteria using the following tax rates: (For taxpayers who use house price to calculate tax, the present rate is 12% ; for taxpayers who use house rental income to calculate tax, the present rate is 18%)
A. the tax on buildings shall be assessed annually at a rate of of the standard value of buildings;
B. the tax on land shall be assessed annually at a rate of 1.5% of the standard value of land;
C. in cities where it is difficult to determine separately the standard value of land and the standard value of buildings, the tax shall be provisionally assessed annually at a rate of 1.5% of the consolidated standard value of the land and buildings;
D. in cities where it is difficult to determine the standard value of land and buildings, the tax shall provisionally be assessed annually at a rate of 15% of the standard rental value of real estate.

Article 7 'The standard value' in the preceding Article shall be appraised as follows:

A. the standard value of buildings shall be appraised for different categories and grades according to the general local market value and with reference to the current cost of local building construction;
B. the standard value of land shall be appraised for different districts and grades according to such conditions as the location of the land, the degree of prosperity of the locality, its communication facilities and with reference to the general local market value of land;
C. the standard value of real estate shall be appraised according to the location of the real estate, local building construction conditions and taking into account the local market value of real estate for different districts and categories and grades of real estate;
D. the standard rental value of real estate shall be appraised for different districts, categories and grades and, generally, according to the local general rental value of land and its affixed buildings.

Article 8 The local taxation authorities shall determine whether Real Estate Tax must be paid in quarterly or semiannual installments.

Article 9 A Commission for Real Estate Assessment, composed of representatives designated by local People's Conferences and by such departments as Finance, Taxation, Land Administration, civil engineering (construction), industry and commerce and public, security shall be established in all cities in which Real Estate Tax is levied. The Commission shall be under the direction of the local People's Government and shall be responsible for carrying out the work of real estate assessment.

Article 10 Real estate shall be assessed annually. When, on examination of the original assessed value, the
Commission for Real Estate Assessment determines that reassessment is not necessary, an extension of validity of the previous year's assessment shall be submitted to the local People's Government for approval.
The appraisal results or the effective limits of the extension, must be examined, approved and publicly announced by the local People's Government.

Article 11 A person responsible for payment of tax shall, within one month following notification of the assessment, file a return with the local taxation authorities in which the real estate is situated, giving the condition of the buildings, the number of rooms, the floor space and other such information. Changes of address of the owners, transfers of ownership or the expansion or renovation of buildings which result in changes in the value of the property must be reported to the local taxation authorities within ten days following the change in address, the transfer of ownership or the completion of the expansion or renovations.
Returns for real estate which is exempt from Real Estate Tax shall also be filed according to the preceding provisions.

Article 12 Taxation authorities shall establish a register of the investigation and imposition of Real Estate Tax and shall prepare detailed maps showing the different grades of land; based on the assessments made by the Commission and the returns filed by taxpayers, the taxation authorities shall proceed with the investigation, registration and verification of the tax and shall issue a notice for payment of tax to the Treasury within stipulated time limits. If the taxpayer disagrees with the result of the assessment, he shall both pay the tax and apply to the Commission for reconsideration.

Article 13 Where a taxpayer fails to file the return within the time limits specified in Article 11, he shall be liable to a fine of up to 500000 yuan.

Article 14 Where a taxpayer fails to declare real estate holdings or files a fraudulent return and thereby attempts
to evade tax shall, in addition to payment of the tax due, be liable to a fine of up to five times the tax due.

Article 15 Any person may report violations of the provisions in the two preceding Articles. Following investigation and handling of the violation, the informant shall be granted a reward of 20% to 30% of the fine; confidentiality shall also be maintained with respect to the informant's report.

Article 16 Where a taxpayer fails to pay tax on time, in addition to setting a new time limit for payment of the tax, a late payment fine of 1 % of the amount of tax due shall be imposed for each day that the tax remains unpaid.
Where tax has not been paid within 30 days of the time limit, and the taxation authorities deem without good reason, the case may be transferred to the People's Court.

Article 17 Provincial (municipal) taxation authorities shall, in accordance with these provisions, formulate measures for investigating and collecting Real Estate Tax and shall submit those measures to the provincial (municipal) People's Government for approval and implementation and shall also submit the measures to the State Administration of Taxation of the Ministry of Finance of the Central People's Government for the record.

Article 18 After these Regulations are issued the unit methods used by any locality with a relevant Real Estate Tax will be annulled.

Article 19 These Regulations come into effect on the date of issue.