Interpretations and Interim Regulations of Some Specific Issues about House Property Tax

(Cai Shui Di [1986] No. 008)

1. The Interpretation on the Cities, Counties, Administrative Towns and Industrial and Mining Areas

The "cities" refers to the cities established upon approval of the State Council.

The "counties" refers to the places where the people's governments of counties without administrative town are situated.

The "administrative towns" refers to the administrative towns established upon the approval of the people's government of the provinces, autonomous regions or municipalities directly under the Central Government.

The "industrial and mining areas" refers to the places of medium and large-scale industrial and mining enterprises that have well developed industry and commerce, have a comparatively dense population, meet the standards for administrative towns prescribed by the State Council but have not set up administrative towns. The industrial and mining areas in which house property tax shall be collected shall be subject to the approval of the people's government of the province, autonomous region or municipality directly under the Central Government.

2. The Interpretation of the Scope of Tax Collection of Cities and Administrative Towns The scope of tax collection of cities shall be the downtowns and suburbs and counties under the cities, not including rural areas.

The scope of tax collection of administrative towns shall include the places where the people's government of towns are situated, not including the administrative villages under these towns.

3. The Interpretation of Mass Organizations

The "mass organizations" refers to various social groups that are established upon approval of or registered for archival filing by the government departments authorized by the State Council and for which the State will appropriate the administrative and operational expenses.

4. Do "entities for which the public financial departments of the State appropriate the operational expenses" include those institutions for which the public financial departments of the State appropriate the operational expenses and which implement budget management by remainder?

The institutions that implement budget management by remainder have a certain amount of income, but it is not enough to cover all their expenditure, and they still need the appropriation from the State finance departments. Therefore, the institutions that implement budget management by remainder also fall into the category of "entities for which the public financial departments of the State appropriate the operational expenses", and for the house properties for their own use, house property taxes shall be exempted.

5. Is there any preferential policy on tax reduction or exemption for entities for which the public financial departments of the State originally appropriate the operational expenses and which start to be responsible for their own income and outlay?

The house property tax shall still be levied for entities for which the public financial departments of the State originally appropriate the operational expenses and which start to be responsible for their own income and outlay. However, for the purpose of encouraging economic independence of the public institutions, such entities can be exempted from house property tax for three years from the year when the institution takes responsibility for the income and outlay of its source of expenditure.

6. The Interpretation of the House Property for Self-use of Tax-exempt Entities

The "house property for self-use by state organs, mass organizations and armies" refers to the houses for office business and public affairs.

The "house property for self-use by public institutions" refers to the operational houses of these institutions.

The "house property for self-use by religious temples and shrines" refers to the houses for conducting religious rituals and the residential houses of the religious personnel.

The "house property for self-use by parks, scenic spots and places of historic interest" refers to the houses for public visits and sightseeing as well as the office houses of the relative managing entities.

The leasehold house properties and the houses for production and business beyond the scope of their own operations of the entities hereinabove are not within the scope of tax exemption, and house property taxes shall be levied.

7. How to levy house property taxes on the house properties of other entities used by tax-paying entities and individuals free of rental?

The house property taxes of the house properties of the housing management departments, tax-exempt and tax-paying entities used by tax-paying entities and individuals free of rental shall be paid by users on behalf.

8. How to determine the tax payment places for taxpayers with house properties at different places?

According to the Article 9 of the Interim Regulations of House Property Tax, "the house property tax shall be collected by the taxation administration in the place where the house property is situated". Taxpayers with house properties at different places shall pay house property taxes to the taxation administrations according to locations of their house properties respectively.

9. Can the house property tax be levied on the factories and warehouses beyond the scope of tax collection?

According to the Interim Regulations of House Property Tax, no house property tax shall be levied on factories and warehouses beyond the scope of tax collection.

10. On Whether to Exempt House Property Taxes on the Houses for Self-use by Schools, Hospitals, Nurseries and Kindergartens That Are Operated by Enterprises

If the houses properties are for self-use by schools, hospitals, nurseries and kindergartens that are operated by enterprises, the house property taxes can be exempted as for the house properties for self-use by entities for which the public financial departments of the State appropriate the operational expenses.

11. On Whether to Levy House Property Tax on Underground Air Defense Facilities for Business Use

For the purpose of encouraging the use of underground air defense facilities, house property tax shall not be levied on these facilities for the time being.

12. On Whether to Levy House Property Tax on the Leasehold House of Individual Ownership

House property tax shall be levied on all leasehold houses by individuals, regardless of their purposes.

13. Will house property tax be levied on the part exceeding the area standard verified by local authorities on residential houses of individual ownership?

According to the provisions of the Interim Regulations of House Property Tax, the house property of individual ownership for non-business use shall be exempted from house property tax. Therefore, the residential house of individual ownership shall be exempted from house property tax regardless of the size of areas.

14. With respect to the leasehold house of individual ownership, shall the house property tax be counted and paid on the residual value or the rental income of the house property?

According to the provisions of the Interim Regulations of House Property Tax, the house property tax shall be counted on the rental income of leasehold house. Therefore, taxes shall be levied on leasehold houses of individual ownership based on the rental income.

15. On How to Determine the Original Value of the House Property

The "original value of the house property" refers the original prices recorded in the "fixed assets" of account books by taxpayers according to the provisions of accounting policies. If the taxpayer has not made the record according to the provisions of accounting regulations, the original value of the house property shall be adjusted according to the relevant rules when house property tax is counted and levied； and any original value of the house property obviously unreasonable shall be re-assessed.

16. With respect to the hazardous houses and dilapidated houses that can hardly be resided in, can they be exempted from house property tax?

With respect to the hazardous houses and dilapidated houses that can hardly be resided in, they can be exempted from house property tax after the cessation of use upon the appraisal by relevant authorities.

17. If the house property tax is counted and paid on the residue value after deducting 10% to 30% of the original value of the house property, can this amount of deduction be determined respectively according to the status of the house? Can the amount of deduction exceed this range for some houses?

According to the provisions of the Interim Regulations of House Property Tax, the detailed amount of deduction and whether to determine this amount respectively according to the status of the house shall be stipulated by people's governments of provinces, autonomous regions and municipalities directly under the Central Government, and the amount of deduction can only be within the range from 10 percent to 30 percent.

18. Can the house property of meagre-profit enterprises and loss-making enterprises be exempted from house property tax?

As the house property tax is a property tax in nature, it shall be levied on the house property of meagre-profit enterprises and loss-making enterprises according to the regulation, thereby pushing the enterprises to enhance their operation management and to improve the economic efficiency. Nonetheless, in consideration of the actual affordability of the enterprises, local authorities may exempt house property tax on such enterprises within a certain period according to their actual conditions.

19. On How to Levy Tax on Newly-built Houses

With respect to the houses constructed by the taxpayers themselves, the house property tax shall be levied from the next month upon the completion of construction. With respect to the houses built by construction enterprises as contracted by taxpayers, the house property tax shall be levied from the next month after the acceptance inspection formalities have been handled.

With respect to the newly-built houses that have been used, rented and lent before handling the acceptance inspection formalities, the house property tax shall be levied according to the regulation.

20. Will the collection of house property tax be stopped after an enterprise ceases production or withdraws?

After the enterprise ceases production or withdraws, if their existing houses leave unused, the house property tax can be exempted tentatively upon the approval of the taxation bureaus of provinces, autonomous regions and municipalities directly under the Central Government. If these houses are transferred to other tax-paying entities or when the enterprise resumes production, house property tax shall be levied according to the regulation.

21. Will the house property tax be levied on the temporary houses on construction sites?

All temporary houses serving for the construction purpose located on the sites, including various work sheds, material sheds, relaxation sheds, offices, canteens, stove houses and garages, regardless of whether they are built by construction enterprises or they are funded and built by capital construction entities and used by construction enterprises, shall be exempted from house property tax during the construction period. However, if these temporary houses are returned to or appraised and transferred to capital construction entities by the construction enterprises after the completion of the construction works, the house property tax shall be levied according to the provisions from the next month upon acceptance by the capital construction entities.

22. On Whether to Levy House Property Taxes on the House Properties Used by the Commercial Units Affiliated to Parks, Scenic Spot ad Places of Historic Interest

House property taxes shall be levied on the commercial units affiliated to the parks, scenic spots and places of historic interest, such as cinemas, restaurants, tea houses and photo studios.

23. Will the house property tax be levied on the house property for which the lessee is responsible for the repair and will not pay rental?

If the lessee uses the house property and pays the repair fees in place of the rent, the house property owner shall still pay the house property taxes according to the regulation.

24. Can the house property tax be exempted for houses closed down for overhaul?

If the house is closed down for overhaul for more than half a year, it can be exempted from house property tax during the overhaul period upon the taxpayer's application and the approval by the taxation administrations.

25. How shall house property tax be levied on houses used jointly by tax-paying entities and tax-exempt entities?

The house used jointly by tax-paying entities and tax-exempt entities shall be divided into portions used by respective entities according to the applications, and tax collection or exemption shall be implemented respectively.