According to local medias, the Standing Committee of the National People’s Congress (NPC) in China voted on “decisions regarding reforms to local real estate tax” the previous day.
Taking into account the dynamics of the real estate market, the National People’s Congress assigned the State Council the responsibility for preparing and implementing detailed regulations. Taxation pertains to residential and non-residential real estate. However, the plan does not include residential land and rural real estate.
Upon enactment by the State Council, the method of application of the real estate tax is valid for five years.
In mid-August, Chinese President Xi Jinping presented a plan to implement each phase of co-prosperity. It was unveiled at the 10th meeting of the Central Finance and Economic Committee. Aside from real estate, Xi listed income inequality, education and antitrust reform. The first is real estate.
In China, only a value-added tax and an acquisition tax are imposed on the purchase and sale of houses. Additionally, there is also no inheritance tax.
As a result, real estate has long been a sought-after industry in China, offering many benefits to property owners. The real estate industry contributes 30% of China’s gross domestic product (GDP).
Reforming China’s common wealth ecosystem.
Step-by-step action plan of common wealth declares real estate reform as a means to cut its structure to pieces.
In accordance with President Xi’s directive that “housing is a place for living, not speculation”. The Chinese government has already blocked new loans to real estate companies. In addition, it has begun to urge the repayment of existing loans.
Furthermore, in the wake of the Evergrande incident, the commission launched an investigation into the improper relationship between private companies and financial institutions.
Using the real estate tax pilot project as an opportunity, it is highly likely that income tax and other tax increases for the rich in China will follow one after another.
According to Xi, he plans to rationally adjust excessively high incomes and improve the tax system in order to eliminate polarization and distributional inequality.