This Announcement aims to further regulate the collection and administration of land appreciation tax nationwide and enhance the certainty of policy implementation. The key points are organized by different administrative stages of land appreciation tax as follows:

• Land Acquisition Phase

Clarified the deduction rules for "expenditures outside the red line": Where the taxpayer and a people's government at or above the county level (or its relevant department) agree in the land grant contract or its supplementary agreement to construct public facilities outside the planning scope of the real estate development project for the government, the actual expenditures incurred shall be included in the "amount paid for obtaining land use rights" for deduction purposes.

• Tax Pre-collection Phase

Clarified the timing of tax pre-collection filing: The starting point for filing pre-collection land appreciation tax shall be determined by whichever occurs first between obtaining the pre-sale permit or receiving pre-sale income; the deadline shall be the end of the last pre-collection tax period prior to the date of issuance of the final settlement acceptance notice. Pre-collection land appreciation tax shall be filed and paid on a monthly or quarterly basis, as uniformly determined by the tax authorities of each province or municipality.

Clarified the tax base for pre-collection: The provision in State Taxation Administration Announcement [2016] No.70 stating that "the tax base for pre-collection of land appreciation tax = advance receipts - VAT payable in advance" has been abolished. The calculation formula has been uniformly revised to: advance receipts / (1 + applicable VAT rate or collection rate). The tax base for pre-collection is now smaller than under the previous regulations.

• Tax Final Settlement Phase

Clarified the deadline for aggregating sales amount and sales area for tax final settlement: The end of the last pre-collection tax period prior to the acceptance of final settlement.

Clarified that stamp duty and local education surcharges paid by taxpayers due to real estate transfer shall be deducted as "taxes related to real estate transfer" (Article 9 of Caishuizi [1995]No.48 stipulates that for real estate development enterprises, stamp duty paid in accordance with the relevant provisions of the Financial System for Construction and Real Estate Development Enterprises shall be included in administrative expenses and deducted under "real estate development expenses," and shall not be deducted separately. Other taxpayers of land appreciation tax are allowed to deduct stamp duty paid at the time of transfer when calculating land appreciation tax.

• Tail-end Sales Phase

Real estate transferred after acceptance of final settlement shall be declared and paid under the tail-end sales method, uniformly on a quarterly basis.

The declaration for real estate transferred between acceptance of final settlement and the issuance of the final settlement review conclusion shall be made within the first tax filing period after the tax authority issues the final settlement review conclusion.

Deductible amount per unit construction area for each type of real estate = Total deductible amount for the corresponding type of real estate verified by the tax authority ÷ Saleable construction area of the corresponding type of real estate. This does not include taxes related to real estate transfer incurred during tail-end sales, which shall be deducted on actual basis.

Conditions for applying the land appreciation tax exemption for tail-end sales: The appreciation amount of ordinary standard housing in the current period does not exceed 20% of the deductible amount.