Deed tax in China is a tax levied on the transferee of a property title when a land and property

title is transferred in accordance with the Provisional Rules on Deed Tax(the “PRDT”) and Provisional Rules on Deed Tax Implementing Rules(the “PRDTIR”).

Taxpayers

The taxpayers of deed tax are any state owned enterprises, collective enterprises, private enterprises, enterprises with foreign investment, foreign enterprises, administrative units, institutions, military units, social organizations, individual business operators and any other individuals who is the transferee of land and house property titles within the territory of China.

Tax Base

Deed tax is normally based on one of the following:

1. The transactional price in case of sale/purchase of houses or sale or use right of State-owned land.
2. Assessment made by tax collection offices in reference to the market price of land use right sale or house sale in case of transferring land use right or house as gift.
3. The difference of the land use right price and the house price in case of exchange of land use right and house.

Tax Rates and Calculation

The deed tax rate is within the range of 3%-5%. Additionally, the rate applicable shall be within the above range determined by the government at the provincial level. The tax payable is computed in terms of Renminbi. The payment foreign currency for transfer of land and house titles should be converted into Renminbi at the exchange rate quoted on the day when the tax liability arises. The formula for computing the tax payable is:

Tax payable = Tax base ×Applicable rate

Exemptions and Reductions

The deed tax exemptions and reductions are mainly as follows :

1. Title deed tax exemption shall be granted to the transfer of lands or houses to government organs, institutional units, social groups and military units to be used as offices, teaching, medical treatment, research and military installations.
2. Title deed taxes shall be exempted for the purchases of public houses by urban workers and staff members for the first time according to regulations.
3. Title deed taxes shall be reduced or exempted for purchases of new houses in cases of destruction of the original houses by force majeure according to the actual conditions of the cases.
4. Cases for title deed tax exemption or reduction prescribed by the Ministry of Finance.