changes 1. land value-added tax will not be levied for the time being for overall renovation
policy: No.5 document stipulates that, according to the provisions of the company law, an unincorporated enterprise will be transformed into a limited liability company or a company limited by shares, and a limited liability company (company limited by shares) will be transformed into a company limited by shares. Land value-added tax will not be levied for the time being for enterprises that have transferred or changed the ownership of state-owned land and houses to those that have been transformed.
tip: the overall reconstruction mentioned here refers to the behavior of not changing the investment subject of the original enterprise and inheriting the rights and obligations of the original enterprise. For example, the transformation of an industrial enterprise owned by the whole people into a wholly state-owned company is a typical overall reconstruction behavior. In practical work, although some non-corporate enterprises are transformed into corporate enterprises as a whole, their investment subjects often change at the same time. At this time, we need to pay attention to the implementation risk of this policy. For example, a rural credit cooperative is restructured into a rural commercial bank, but new shareholders are often introduced at the same time. At this time, changes in the investment subject will affect the application of the above policies.
change ii. land value-added tax will not be levied for the state-owned real estate investment at a fixed price for the time being
policy: Article 1 of the Notice of the Ministry of Finance and State Taxation Administration of The People's Republic of China on Some Specific Issues Concerning the Provisions on Land Value-added Tax (Caishuizi [1995] No.48) stipulates that for real estate investment or joint venture, the investor or joint venture party will transfer the real estate to the investment or joint venture at a fixed price. Land value-added tax shall be levied on the re-transfer of the above-mentioned real estate by investment and joint ventures. Circular No.5 abolished this provision, but Circular No.5 continued to make it clear that when units and individuals invest in state-owned land and houses during restructuring, they will not levy land value-added tax for the time being if they transfer or change the ownership of state-owned land and houses to the invested enterprises.
regarding the question of whether the cost of land acquisition can be continued, No.5 document points out that when an enterprise transfers the state-owned land use right after restructuring and declares to pay the land value-added tax, the land price paid for the state-owned land use right before restructuring and the related expenses paid according to the unified national regulations should be deducted as the "amount paid for the land use right" of the enterprise. If an enterprise is approved by the land administration department at or above the provincial level in the process of reorganization and restructuring, and the state uses the right to use the state-owned land as a capital contribution, when transferring the right to use the state-owned land and reporting and paying the land value-added tax, the appraised price approved by the land administration department at or above the provincial level should be deducted as the amount paid by the enterprise for obtaining the right to use the land. When handling the tax declaration, the enterprise shall provide the approval documents and the approved evaluation price of the land management department at or above the provincial level when the land is priced as a share. If the approval documents and the approved evaluation price cannot be provided, it shall not be deducted. For example, if the original acquisition cost of a piece of land is 1 million yuan when the state-owned enterprise is restructured, but it is approved by the provincial land and resources bureau to invest in shares at the evaluation price of 3 million yuan, it is allowed to deduct its acquisition cost at the subsequent transfer according to 3 million yuan.
Note: According to Circular No.5, units and individuals invest in state-owned land and houses during restructuring, and the land value-added tax will not be levied for the time being if they transfer or change the ownership of state-owned land and houses to the invested enterprises. The policy emphasizes "in the process of restructuring". If units and individuals invest in state-owned land and houses instead of "in the process of restructuring", but only in general occasions, whether the temporary exemption from taxation can be applied is not clear. When taxpayers encounter similar problems, they should also communicate with the tax authorities in time.
changes iii. land value-added tax will not be levied for the time being in the merger of enterprises
policy: article 3 of document No.48 [1995] of Caishuizi stipulates that in the merger of enterprises, land value-added tax will be exempted for the time being if the real estate of the merged enterprise is transferred to the merged enterprise. In practice, this provision is usually interpreted as temporary exemption from taxation for absorption and merger, but the operation varies from place to place for new merger of enterprises. Circular 5 abolished this provision and further clarified that if two or more enterprises are merged into one enterprise according to the law or the contract, and the original enterprise's investment subject still exists, the original enterprise will transfer and change the ownership of state-owned land and houses to the merged enterprise, and the land value-added tax will not be levied temporarily. This means that whether it is an absorption merger or a new merger, it can be exempted from taxation for the time being.
tip: if combined with accounting treatment, there is another special form of enterprise merger, that is, holding merger. In the holding merger, all the enterprises participating in the merger will not lose their legal entity qualification. In fact, the merged enterprise acquires the equity of the merged enterprise to achieve the control purpose. For this kind of enterprise merger based on equity transfer and equity acquisition, land value-added tax is generally not involved.
change iv. policy of not levying land value-added tax for the time being when enterprises are divided
: the original policy is not clear about whether to levy land value-added tax when enterprises are divided (divided). In practice, Qingdao, Xinjiang, Xiamen and other places tend not to levy land value-added tax, but Beijing and other places tend to levy tax. Circular 5 requires that, according to the law or the contract, enterprises should be divided into two or more enterprises with the same investment subject as the original enterprises, and the land value-added tax will not be levied for the time being for the enterprises that transfer and change the ownership of state-owned land and houses from the original enterprises to the separated enterprises.
tip: there are two forms of enterprise separation (separation), namely, derivative separation and newly-established separation. The difference between the two is that the merged enterprise will continue to exist in the case of new division, but the merged enterprise needs to be dissolved in the case of new division. No matter what kind of separation, as long as the subject after separation is the same, land value-added tax will not be levied for the time being.
change v. close the "preferential door" to real estate development enterprises
policy: Circular No.5 stipulates that the above-mentioned land value-added tax policy related to restructuring and reorganization is not applicable to real estate development enterprises. Previously, Article 5 of the Notice of the Ministry of Finance and State Taxation Administration of The People's Republic of China on Several Issues Concerning Land Value-added Tax (Caishui [26] No.21) stipulated that the first article of Caishuizi [1995] No.48 document was temporarily exempted from land value-added tax for those who invested in or joined the joint venture, those who invested in or joined the joint venture engaged in real estate development, or those who invested in and joined the joint venture with commercial houses built by them. After the publication of Circular No.5, this article was also abolished, but the special land value-added tax policy of "not collecting for the time being" is still "tightly closed" to real estate development enterprises. This regulation is mainly to maintain the continuity of policies and prevent some real estate development enterprises from "transferring real estate" in the name of "restructuring". It should be noted that no matter whether it is merger or division, as long as either party is a real estate development enterprise, the specific policy of restructuring and reorganization stipulated in Document No.5 should not be applied.
tip: if an enterprise enjoys the relevant preferential land value-added tax policies in accordance with the relevant provisions of Circular No.5, it shall submit the relevant real estate, state-owned land ownership certificate, value certificate and other written materials to the competent tax authorities in time. The implementation period of preferential policies is from January 1, 215 to December 31, 217.