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Circular on Certain Issues regarding Land Value-added Tax Calculation (SAT Circular 220) - 国家税务总局关于土地增值税清算有关问题的通知
July 1, 2010
Released and effective on May 19, 2010
The State Administration of Taxation (“SAT”) on May 19, 2010 issued a Circular Regarding Certain Issues of Calculating Land Value-Added Tax (“LVAT”), which clarifies the calculation methods of LVAT.
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Idle Land Fee: where the enterprise income tax is calculated, any idle land fees shall not be deducted. According to the relevant regulations, in the event that a developer does not start development within one year after obtaining the land use right, an idle land fee may be imposed based on 20% of the land grant price. Furthermore, if the delay lasts for more than 2 years, the land bureau is entitled to reclaim the land use right without compensation;
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Deed Tax: the deed tax paid for obtaining the land use right by the developer can be deducted and booked under the item of "sum paid for obtaining the land use right";
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Determination: when the LVAT is calculated, the income shall be determined based on the receipt provided that the receipt of sales of commercial residential building is fully issued. Otherwise, the income shall be determined based on the sales amount agreed in the sales contract.