China’s Current Tax System – Land Appreciation Tax
(1) Taxpayers
The taxpayers of Land Appreciation Tax include enterprises, units, individual household businesses and other individuals who receive income from a disposal or other means of transfer with consideration of State-owned land use rights, buildings on land and their attached facilities (hereinafter referred to as transfer of real estate).
(2) Tax base and tax rates
The Land Appreciation Tax is based on the appreciation amount derived by the taxpayer from the transfer of real estate, which equals to the balance of proceeds received by the taxpayer on the transfer of real estate after deducting the sum of deductible items as prescribed.
The Land Appreciation Tax adopts four levels of progressive rates;
Table of Land Appreciation Tax Rates
| Level | Tax base | Tax rates |
| 1 | That part of the appreciation amount not exceeding 50% of the sum of deductible items | 30% |
| 2 | That part of the appreciation amount exceeding 50%, but not exceeding 100%, of the sum of deductible items | 40% |
| 3 | That part of the appreciation amount exceeding 100%, but not exceeding 200%, of the sum of deductible items | 50% |
| 4 | That part of the appreciation amount exceeding 200% of the sum of deductible items | 60% |
(3) Computation of tax payable
To calculate the amount of Land Appreciation Tax payable, the first step is to arrive at the appreciation amount derived by the taxpayer from the transfer of real estate, which equals to the balance of proceeds received by the taxpayer on the transfer of real estate after deducting the sum of relevant deductible items. Then the amount of tax payable shall be calculated respectively for different parts of the appreciation by applying the applicable tax rates in line with the percentages of the appreciation amount over the sum of the deductible items. The sum of the amount of tax payable for different parts of the appreciation shall be the full amount of tax payable by the taxpayers. The formula is:
Tax payable = S (Part of appreciation x Applicable rate)
(4) Major exemptions
The Land Appreciation Tax shall be exempt in situations where the appreciation amount on the sale of ordinary standard residential buildings construction by taxpayers for sale does not exceed 20% of the sum of deductible items and when the real estate is taken over or repossessed in accordance to the laws due to the construction requirements of the State.