Yicai:

What are the considerations for advancing the implementation of tax policies that are aligned with the cancellation of standards for ordinary and non-ordinary residential housing in the next step? Thank you.

Song Qichao:

Thanks for your question. The third plenary session of the 20th CPC Central Committee made it clear that some cities will be permitted to scrap relevant standards for ordinary and non-ordinary housing. Currently, the Ministry of Finance is stepping up its efforts to study and clarify tax policies that are aligned with the abolition of standards for ordinary and non-ordinary housing, mainly comprised of value-added tax and land value-added tax.

The current policies are as follows: In terms of value-added tax, except for the four top-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, if an individual in other cities sells a residential property, the value-added tax is exempted after two years (inclusive) of the purchase, regardless of if it is ordinary or non-ordinary housing. In the cities of Beijing, Shanghai, Guangzhou and Shenzhen, if an individual sells ordinary residential housing, the value-added tax is exempted after two years (inclusive) of the purchase; if an individual sells non-ordinary residential housing, the value-added tax is payable after two years (inclusive) of the purchase. In terms of land value-added tax, it is exempted for constructing or selling ordinary standard residential housing with an appreciation rate of less than 20%. According to the relevant provisions of the detailed rules for implementation of provisional regulations on land value-added tax, the standards for ordinary residential housing shall be clarified by each province.

Recently, we have been making further adjustments to the mentioned tax policies. The general considerations concern three aspects.

First, both the tempo of regulating and controlling the real estate market and local fiscal revenues in relevant cities will be taken into consideration to make sound arrangements.

Second, local governments will be given certain decision-making powers to maintain the stability and fairness of policies.

Third, the burdens on real estate enterprises and homebuyers will be effectively reduced to stabilize the real estate market.

We are moving quickly on advancing relevant procedures for the introduction of specific policies and will make these policies public in a timely manner after approval. Thank you.