" VAT reform ", for the real estate industry, the State Administration of Taxation issued the "Announcement on the Issuance of the Interim Measures for the Collection and Management of Value-Added Tax for Real Estate Projects Developed by Real Estate Development Enterprises" (Announcement of the State Administration of Taxation [2016] No. 18), allowing the land transfer fee to be deducted from the sales amount under the general tax calculation method of value-added tax .
How to tax the sales tax corresponding to the reduction in the sales deduction land price is included in income, deduct costs, or does not need to be processed. Different tax types have different treatment methods according to current regulations. Start by analyzing the current policies and explaining in detail how to deal with various taxes based on cases. When land value-added tax and corporate income tax, it is processed according to the sales amount; when calculating deed tax and stamp duty, the tax is calculated according to the original value of the land transfer fee.
For real estate developers, paying the land price is a prerequisite for applying for land use certificate and conducting subsequent development. Generally speaking, the tax treatment of land prices of real estate companies is relatively clear, but the tax treatment of land-related expenses derived from subsequent development and construction links is not the same. This article will briefly analyze the tax treatment of land prices and land-related expenses in the form of a case.
case basic information
A real estate development company obtained a land use right through bidding and auction in Shenzhen in 2017, and it was required to pay a land price of 2 billion yuan (including: transfer fee of 330 million yuan, land development fee of 0.02 million yuan, and municipal supporting facilities gold 1.668 billion yuan). After the project is completed, all properties will be available for sale, and all sales of the project will be completed and the tax-inclusive sales revenue will be 10 billion yuan.
1. Value-added tax processing
"Announcement of the State Administration of Taxation on Issuing the Interim Measures for the Collection and Management of Value-added Tax for Real Estate Projects for Sales by Real Estate Development Enterprises" (Announcement of the State Administration of Taxation [2016] No. 18) stipulates that general taxpayers in real estate development enterprises shall apply to the general tax calculation method to calculate tax, and the sales amount shall be calculated based on the total price and extra-price expenses obtained, and the balance after deducting the land price corresponding to the current sales real estate project. Article 5 stipulates that the land price paid refers to the land price paid directly to the government, the land management department or the unit entrusted by the government to collect the land price.
According to the above provisions, the land price paid directly by a real estate development enterprise to the government, the land management department or the unit entrusted by the government to collect the land price can be deducted in the sales in full. However, we have noticed that in the Land Use Rights Transfer Agreement signed by real estate development companies and the land department, the land price does not constitute a single structure. The non-single composition of land prices may cause tax risks in practical land prices deductions.
Figure 1 Land price terms of "Land Use Rights Transfer Agreement"
Take Shenzhen as an example, the land price includes at least three parts: Land use right transfer fee , land development money and municipal supporting facilities money. Judging from the proportion of the amount of these three parts, the land development fund is the lowest, the land use right transfer fund is the second, and the municipal supporting facilities fund accounts for the highest proportion. In the case, the land use right transfer fee accounted for 16.5%, and the municipal supporting facilities accounted for as high as 83.4%.
In accordance with Article 2 of the "Guidelines for Shenzhen's comprehensive implementation of "VAT reform" pilot work (IV) - Real Estate Industry", the land transfer fee in the land price that changes the nature of land use and the demolition compensation paid to other units or individuals when obtaining land are allowed to be deducted when calculating sales, and urban supporting facilities fees and other items not within the above scope shall not be deducted when calculating sales. Therefore, the land price that can be deducted from the value-added tax sales of is only the land use right transfer fee, and the municipal supporting facilities that account for the highest proportion cannot be deducted.In this case, the land price is only 330 million yuan, which can be deducted from the sales revenue of 10 billion yuan:
Sales = 100-3.3 = 9.67 billion yuan
Sales tax = 96.7÷1.09×9% = 798 million yuan
2. Land value-added tax processing
"Notice of the State Administration of Taxation on Issuing the "Land Value-added Tax Propaganda Outline"" (State Taxation Hanfa [1995] No. 110) stipulates that the "amount paid for obtaining land use rights" in the land value-added tax deduction project, including the land price paid by the taxpayer to obtain land use rights and the relevant fees paid in accordance with the unified national regulations. Specifically: if the land use right is obtained through transfer, the land transfer fee will be paid; if the land use right is obtained through administrative allocation, the land transfer fee will be paid in accordance with regulations when transferring the land use right; if the land use right is obtained through transfer, the land price will be paid. Therefore, the land price paid by real estate development companies to government departments meets the full deduction of land value-added tax. In this case, the land price of 2 billion yuan can be used as the deduction item when the land value-added tax is liquidated by .
According to the aforementioned tax treatment analysis of VAT, the land price of 330 million yuan can be deducted from the sales, so that the VAT is paid less. Accordingly, some tax authorities believe that the VAT paid by real estate developers should reduce the corresponding land costs when liquidating the land value-added tax, that is, the land cost in this case should be confirmed at 1.973 billion yuan (20-3.3÷1.09×9%). On the other hand, according to the provisions of the accounting for the difference taxation accounting document [2016] No. 22, the value-added tax amount corresponding to the sales part of the land price offset should be offset accordingly. For this case, the real estate development company A should do the following accounting treatment:
Debit: Taxes and fees payable - Value-added tax payable (export tax offset) 2 7 million yuan
Debit: Real estate development cost -land price -2 7 million yuan
How should we perform tax treatment for the sales tax amount offset by the land price? Article 1 of the "Announcement of the State Administration of Taxation on Several Regulations on the Collection and Administration of Land Value-added Tax after the VAT Reform" (Announcement of the State Administration of Taxation [2016] No. 70) stipulates that after the VAT Reform, the taxable income of the land value-added tax transferred by the taxpayer does not include VAT. For taxpayers who apply the general tax calculation method of VAT, their land value-added tax revenue from transferring real estate does not include VAT output tax; for taxpayers who apply the simple tax calculation method, their land value-added tax revenue from transferring real estate does not include VAT taxable amount .
We noticed that the expression of land value-added tax revenue for general taxable items in Announcement No. 70 is "excluding the output tax amount", not "tax payable", that is:
Land value-added tax revenue = all price and out-of-price expenses - output tax amount
According to the provisions of the State Administration of Taxation No. 18 of 2016, the output tax amount = (all price and out-of-price expenses - allowed land price deduction) ÷ (1+9%) × 9%, thus:
Land value-added tax revenue = all price and out-of-price expenses - output tax amount
= all price Payment and out-of-price expenses - (all price and out-of-price expenses - allowable deduction of land price) ÷ (1+9%) × 9%
= all price and out-of-price expenses - all price and out-of-price expenses ÷ 1.09×9%+ allowable deduction of land price ÷ 1.09×9%
= all price and out-of-price expenses ÷ 1.09+ allowable deduction of land price ÷ 1.09×9%
In other words, if the accounting processing of Enterprise A is carried out in accordance with the provisions of the Accounting No. 22 of the Accounting [2016], necessary tax adjustments are required when liquidating land value-added tax, and the amount of the output tax deduction of land price is adjusted to the land value-added tax tax revenue. For this case, the taxable income declared by Enterprise A during the liquidation of land value-added tax should be 9.201 billion yuan (100÷1.09+3.3÷1.09×0.09).
III. Processing of corporate income tax
"Notice of the State Administration of Taxation on Issuing the "Regulations on the Handling of Enterprise Income Tax for Real Estate Development and Operation Business" (GuoShiFa [2009] No. 31) stipulates that land expropriation fee and demolition compensation fee refer to various expenses incurred for obtaining land development and use rights (or development rights), mainly including land purchase price or transfer fee, municipal supporting fees, deed tax, cultivated land occupation tax , land use fee, land idle fee , land change purpose and over-area compensation, land price and related taxes, demolition compensation expense, resettlement and relocation expense, relocation housing construction expense, crop compensation expense, dangerous housing compensation, etc.
According to the above provisions, the land price of 2 billion yuan paid by Company A can be deducted as taxable costs. The differences between accounting treatment and tax regulations in accordance with the accounting document [2016] No. 22 should be made as necessary adjustments during reconciliation and settlement.
4. Tax processing of deed tax
Whether it is the "Notice of the Ministry of Finance and the State Administration of Taxation on the Transfer of State-owned Land Use Rights and other related deed tax issues" (Financial and Taxation [2004] No. 134, abolished), or the provisions of the " Deed Tax Law " (Chairman Order [2020] No. 52) and its supporting documents, the tax calculation basis for the deed tax is the transaction price determined in the land ownership transfer contract, including the currency to be delivered and the prices corresponding to the physical and other economic interests. Therefore, the land price paid by an enterprise in accordance with the land transfer agreement should be used as the basis for tax calculation of deed tax.
In this case, Company A should use a transaction price of 2 billion yuan as the basis for deeds to pay tax. At the same time, in accordance with Article 5 of the "Notice of the State Administration of Taxation on Issues Related to Land Value-added Tax Clearing" (State Tax Letter [2010] No. 220), the deed tax paid by Enterprise A can also be deducted as the "amount paid for obtaining the land use right".
5. Tax processing of stamp duty
Article 5 of the "Detailed Rules for the Implementation of the Interim Regulations of Stamp Tax" (Financial and Taxation No. [1988] No. 255) stipulates that the property transfer document mentioned in Article 2 of the Regulations refers to the document established by the sale, inheritance, gift, exchange, division of property rights of units and individuals. The provisions of the "Notice of the State Administration of Taxation of the Ministry of Finance and the State Administration of Taxation on Several Policies for Stamp Taxation" (Finance and Taxation [2006] No. 162) shall impose stamp duty on the land use rights transfer contract and land use rights transfer contracts according to the property transfer letter.
Therefore, Company A should pay stamp duty in accordance with the "Property Transfer Document" signed by it with the government department, with a tax rate of 5% of ten thousand, that is, Company A needs to pay stamp duty of 1 million yuan.
In the above, we mainly analyze the conventional land price tax treatment. Next, we mainly analyze the late payment fee, interest and tax treatment of the delayed completion penalty paid in accordance with the Land Use Rights Transfer Agreement.
case basic information
A real estate development company obtained a land use right through bidding and auction in Shenzhen in 2017, and was required to pay a land price of 2 billion yuan (including: transfer fee of 330 million yuan, land development fee of 0.02 million yuan, and municipal supporting facilities fee of 1.668 billion yuan). Due to difficulties in capital turnover, Company A failed to pay the land price as promised. When actually paying the land price, it paid another land late payment fee of 20 million yuan and land transfer fee interest of 06 million yuan. Due to the construction dispute, the actual completion time of the project exceeded the agreed time, and a liquidated damages of 50 million yuan were paid for the delayed completion. After the project is completed, all properties will be available for sale, and all sales of the project will be completed and the tax-inclusive sales revenue will be 10 billion yuan.
1. Value-added tax processing
As mentioned in "Tax Treatment of Land Prices of Real Estate Development Enterprises (Part 1)", whether it is the land late payment fee, land transfer fee interest or delayed completion penalty, it does not belong to the "land use right transfer fee" in the land price, and cannot be deducted as the "land price" in the value-added tax, that is, the land late payment fee paid by Company A is RMB 20 million, the land transfer fee interest of RMB 06 million, and the delayed completion penalty of RMB 50 million, the total 76 million cannot be deducted from the sales.
Sales = 100-3.3=9.67 billion
Sales tax = 96.7÷1.09×9%=798 million
2. Land value-added tax processing
In practice, we usually consider a question: if it can be deducted, what type of cost item should it be deducted as .
According to Article 6 of the "Interim Regulations on Land Value-Added Tax (Amendment in 2011)" ( State Council Order [2011] No. 588), the deduction items for calculating the value-added amount of include: the amount paid for obtaining the land use right; the cost and expenses of developing land; the cost and expenses of new houses and supporting facilities, or the appraisal price of old houses and buildings; taxes related to the transfer of real estate; other deduction items stipulated by the Ministry of Finance. According to Article 7 of the "Detailed Rules for Implementing the Interim Regulations on Land Value-added Tax" (Financial Law No. [1995] No. 6), "the amount paid for obtaining the land use right" refers to the land price paid by the taxpayer to obtain the land use right and the relevant fees paid in accordance with the unified national regulations. "Other deduction items stipulated by the Ministry of Finance" usually refer to the additional deduction amount of 20% for taxpayers engaged in real estate development. Obviously, the land late payment fee, land transfer fee interest, and liquidated damages for delayed completion can only be deducted according to the "amount paid for obtaining the land use right".
Figure 1 Late payment fee and interest clause in the Land Use Rights Transfer Agreement
Figure 2 The liquidated damages clause in the Land Use Rights Transfer Agreement
Some people believe that the land late payment fee, land transfer fee interest and delayed completion penalty are all expenses arising from the Land Use Rights Transfer Agreement and are part of the land price, so they can be deducted; there is another view that the land late payment fee and the delayed completion default metal cannot be deducted from the administrative fine, while the land transfer fee interest belongs to part of the land price and can be deducted.
In fact, before analyzing whether the above three types of costs can be deducted from land value-added tax, we need to know that the land transfer behavior of government departments is a civil act rather than an administrative act. Although there is controversy over the characterization of government land transfer behavior in practice, we found that in Shenzhen, whether it is land late payment fees or delayed completion penalty, government departments will not issue documents such as the "Administrative Penalty Decision" in accordance with the provisions of " Administrative Penalty Law of the People's Republic of China ". From this perspective, the land late payment fee and the liquidated damages for delayed completion do not belong to administrative fines, but should be included in the breach of contract by the parties to the contract (the transferee of the land use right) as included in the "non-operating expenses", and this part of the expenditure shall not be deducted as the "amount paid for obtaining the land use right".
For the interest on land transfer fee, we believe that it belongs to the "out-of-price fee" of land transfer price , which is essentially still the land price, and it should be deducted according to the "amount paid for obtaining the land use right". Xiamen Municipal Taxation Bureau also supported the deduction processing in its online Q&A in May 2021: Real estate development companies pay the transfer price of the transfer of state-owned construction land use rights to the transferor in installments in accordance with the "State-owned Construction Land Use Right Transfer Contract" and bear the corresponding interest. When handling land value-added tax liquidation, it is temporarily allowed to be included in the amount paid for obtaining the land use rights.
Figure 3 Xiamen Municipal Taxation Bureau’s online Q&A
Combined with the analysis of “Tax Treatment of Land Prices of Real Estate Development Enterprises (Part 1)”, when Company A is conducting land value-added tax liquidation, the deductible land cost is 2.006 billion yuan (land price 20 + land transfer fee interest of 0.06).
3. Corporate income tax processing
For example, analysis of land value-added tax, land late payment fees and delayed completion of default metals in default not belong to the tax late payment fees and fines stipulated in Article 10 of the Enterprise Income Tax Law of the People's Republic of China (Amendment in 2018) (Chairman Order [2018] No. 23), and the expenditure is a direct expenditure related to the enterprise's income acquisition. Therefore, the expenditure can be deducted in full in one lump sum in the current period of corporate income tax.
For the interest on land transfer fees, we understand that the "Notice of the State Administration of Taxation on Issuing the "Regulations on the Handling of Income Tax for Real Estate Development and Operation Business" (GuoShiFa [2009] No. 31) can be deducted as necessary expenses incurred in order to obtain the right to develop and use the land.
In this case, the land cost of Company A's income tax is 2.006 billion yuan (land price 20 + land transfer fee interest of 0.06).
4. Deed Tax Processing
In accordance with the provisions of the Deed Tax Law (Chairman Order [2020] No. 52) and its supporting documents, the tax calculation basis for land use rights is the transaction price determined in the land ownership transfer contract, including the currency to be delivered and the prices corresponding to physical and other economic interests.
Some tax authorities represented by Anhui, Henan and Jilin believe that breach of contract expenses such as land price late payment fees do not belong to the land transfer fee agreed in the contract, so there is no need to pay deed tax. However, we also understand that some tax authorities usually have several criteria for judging whether a expenditure related to a land transfer agreement is paid for deed tax, such as whether it is paid to the government, whether it is clearly agreed in the land transfer agreement and its supplementary agreement, and whether it is impossible to apply for a land use right certificate without bearing the expenditure, etc. When an expenditure meets any two of the above standards, it is very likely that the tax authorities will collect deed tax.
Although Company A cannot determine whether to pay the land price late payment fee, interest and liquidated damages for delayed completion when signing the Land Use Rights Transfer Agreement, the company can foresee that once the agreement is violated, it will bear the corresponding expenditure according to the determined standards. For Company A, the transaction price of the agreement is essentially accompanied by a series of conditions. The series of expenditures generated after the triggering of this condition shall be used as part of the transaction price and the deed tax shall be paid in accordance with the current regulations. At the same time, the late payment fee, interest and liquidated damages paid by Enterprise A in accordance with the land transfer agreement are all payments to the government department, and the payment is a prerequisite for Enterprise A to apply for a land use right certificate. Therefore, Enterprise A shall pay the deed tax on the late payment fee, interest and liquidated damages paid by the land price.
Enterprise A pays deed tax taxable price is 2.076 billion yuan (land price 20 + land late payment fee 0.2 + land transfer fee interest 0.06 + liquidated damages for delayed completion of 50 million yuan).
5. Stamp duty processing
As analyzed in the analysis of the "Tax Treatment of Land Prices of Real Estate Development Enterprises (Part 1)", Enterprise A should pay stamp duty in accordance with the "Land Use Rights Transfer Agreement" signed with the government department in accordance with the "Property Rights Transfer Document" with a tax rate of 5 per thousand. But how to determine the basis for tax calculation of stamp duty? Are stamp duty paid for land price late payment fees, interest and liquidated damages for delayed completion?
According to the provisions of the " Interim Regulations on Stamp Tax of the People's Republic of China ", the basis for the tax calculation of the stamp duty in the transfer of property rights is the "amount contained in the book". What is the "amount loaded"? We understand that the amount has been directly clear in the contract or although it is not clear, the calculation criteria have been clearly defined. For the part that has clearly calculated the standards, it is equivalent to the amount that may be executed in the future. Once executed, the tax basis for stamp duty will be confirmed based on the final amount executed, which is extremely similar to the collection of stamp duty in unit price contracts (only the pricing standards are agreed in the contract).
In this case, the amount directly stated in the contract is 2 billion yuan, and the amount clearly calculated is 76 million yuan. Therefore, we believe that the "amount contained in the Land Use Rights Transfer Agreement" signed by Company A is 2.076 billion yuan (land price 20 + land late payment fee 0.2 + land transfer fee interest 0.06 + liquidated damages for delayed completion of 50 million yuan), and Company A should pay stamp duty of 1.038 million yuan.
