Real estate value-added tax, starting from May 1 2006, comprehensively pushed forward the pilot reform of the camp, including the construction industry, real estate industry, financial industry and life service industry, and the business tax that has been implemented for more than 20 years will officially withdraw from the historical stage.
According to the new VAT rate, the tax rate of 1 1% is applicable to the construction industry and real estate industry, and the tax rate of 6% is applicable to the financial industry and life service industry. The detailed rules for the implementation of the camp reform have not been fully implemented, and the state has promised that all tax burdens will only be reduced and not increased, which makes how to design the specific policy of real estate camp reform has attracted much attention. Under the premise of the current "destocking" of the national property market, the implementation of the reform of the camp is good news for most cities, which helps to reduce taxes and fees and clean up inventory.
It is expected that the policy will tilt towards self-occupation and long-term housing. If the value-added tax is levied, the houses currently exempt from business tax will face the risk of increasing transaction costs. At present, if the original purchase price of a house with full business tax is 49% higher than the current sales price, the value-added tax will be less than the business tax, otherwise, the value-added tax will be greater than the business tax.
For houses with business tax levied on the difference, as the tax rate increases from 5.6% of business tax to 1 1% of value-added tax, the overall tax burden will also increase. According to the general policy that the overall tax burden is only reduced but not increased, we believe that the tax burden ratio with the current business tax will be considered in the implementation rules, and it is not excluded that the houses that are now exempt from business tax are also exempt from value-added tax.