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Taxation China China Beijing Q&A Concerning Property and Other Taxes Levied on Foreign Enterprises Holding Real Estate
FAQChina Beijing Q&A Concerning Property and Other Taxes Levied on Foreign Enterprises Holding Real Estate
| Q： |
Our Hong Kong company holds a property for office use in Beijing, China. Do we need to pay property tax? |
| A： |
Yes. |
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Q： |
Who should pay the property tax? Our Hong Kong company has no branch or subsidiary in Beijing, how can we pay the property tax? |
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A： |
According to the "Interim Regulations of the People's Republic of China on Property Tax", property tax shall be paid by the property owner. If the owner of the property is not in the place where the real estate is located, the custodian or user of the real estate may pay the tax on behalf of the owner. Accordingly, the custodian or user can be entrusted to pay for the tax. In addition, your Hong Kong company can also apply for temporary tax registration with the tax authority where the real estate is located, obtain the taxpayer’s identification number and password, login the Beijing Electronic Taxation Bureau to declare property tax. |
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Q： |
How to calculate property tax? |
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A： |
Property tax is calculated and paid based on the residual value by deducting 10% to 30% from the original value of the real estate. If the real estate is rented out, the rental income of the property shall be used as the basis for computation of the property tax. For property tax calculated and paid based on the residual value of the real estate, the applicable tax rate is 1.2%; while the applicable tax rate is 12% if property tax is calculated based on rental income. |
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Q： |
When should our Hong Kong company declare and pay property tax? |
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A： |
Property tax is collected annually and paid in instalments. The tax payment period is stipulated by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government, so the tax payment period may be various for different provinces or cities. According to the current regulations in Beijing, taxpayers shall declare and pay the property tax for January to June and July to December of the current year within the first 15 days of April and October respectively. In addition, if the annual taxable amount of property tax is less than RMB500,000, the taxpayer can choose to pay full amount of tax within the first 15 days of April. |
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Q： |
Besides the property tax, as the owner of a property in Beijing, does our Hong Kong company need to pay other taxes? |
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A： |
Yes, usually the property owner, that is, your Hong Kong company is also subject to urban and township land use tax. In addition, if the real estate is rented out, you will also need to pay VAT, its surcharges and income tax, these taxes could be withheld and paid by the withholding agent. |
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Q： |
How to calculate urban and township land use tax? |
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A： |
XThe urban and township land use tax is calculated based on the area of land actually occupied by the taxpayer. The annual tax payable per square meter varies greatly for different provinces and cities: RMB1.5-30 for large cities, RMB1.5-24 for medium-size cities, RMB0.9-18 for small cities and RMB0.6-12 for mining areas. In the meantime, the people's governments of various provinces and cities may divide the land into several levels according to the actual situation, that is to say, even if the real estates are all located in Beijing, it is possible that the annual tax payable per square meter may be different due to the level of land. You may consult with our professionals for more details. |
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Q： |
When to declare and pay urban and township land use tax? |
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A： |
Just like property tax, urban and township land use tax is also collected annually and paid in instalments. The tax payment period is stipulated by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government, so the tax payment period may be various for different provinces or cities. According to the current regulations in Beijing, taxpayers shall declare and pay the urban and township land use tax for January to June and July to December of the current year within the first 15 days of April and October respectively. In addition, if the annual taxable amount of urban and township land use tax is less than RMB300,000, the taxpayer can choose to pay full amount of tax within the first 15 days of April. |
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Q： |
We have heard that there are tax reduction and exemption policies on property tax and urban and township land use tax in Beijing. Can our Hong Kong company enjoy it? |
| A： |
According to the "Notice on the Implementation of the Tax Reduction and Exemption Policy for Small Low-profit Enterprises", from January 1, 2019 to December 31, 2021, small-scale VAT taxpayers could enjoy a 50% reduction in property tax, urban and township land use tax and other taxes. However, according to the official reply from the State Administration of Taxation, foreign enterprises do not distinguish between general taxpayers and small-scale taxpayers. Accordingly, the Beijing Taxation Bureau has determined that the aforesaid tax reduction policy is not applicable to foreign enterprises, and your Hong Kong company should declare and pay the property tax and urban and township land use tax in full amount. |
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