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China removes land tax exemption for foreign investors

China removes land tax exemption for foreign investors

China has removed an exemption for foreign investors in land taxes starting from this year, state media reported yesterday, as part of its latest effort to cool the sizzling real estate market.
"Beginning January 1, joint ventures and wholly foreign-owned firms will no longer be exempt from paying land-use tax," the Xinhua news agency reported.
The ending of the priviledge to foreign investors would ensure a "more even playing field" for domestic and overseas companies, Xinhua said.
"The new regulations will also bring to an end to the unfair treatment of deomstic companies which had to pay taxes and fees that overseas firms have been exempted from for nearly two decades," it said, citing official sources.
Meanwhile, annual land-use tax rates were also tripled depending on the size of the city and types of land use, it reported. The new policy is aimed at "bringing better control and better planning to the development and re-development of land," Xinhua quoted government sources as saying.
Runaway land investment has caused rocketing property prices in China and the government has been taking a series of measures to cool investment in order to avoid a possible market crash.
The report also said a new corporate income tax policy is expected to be launched later this year to unify tax rates for foreign and domestic firms.
China's top legislature reviewed in late December the draft tax law that would level foreign and domestic tax rates at 25 percent.
Currently, domestic companies are taxed at an average rate of 24 percent while foreign-funded firms pay only about 14 percent - a gap that has sparked controversy in recent years.
China adopted a two-tier tax system in the 1980s to attract foreign investment to help develop its then-dormant economy.


Updated : 2021-03-04 11:18 GMT+08:00