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Tax on Sino-foreign Cooperative Construction of Houses
After the Chinese side performs the procedures for the transfer of the land-use right in its cooperation with the foreign party on the land it obtains, the method of whether distributing the area of the completed commercial resident, or distributing the income from the sales of the commercial residentdoes not conform with the stipulations of the current policy that "business tax is exempt from the behavior of investing and buying shares with invisible assets, participating in and accepting the investor’s profit distribution and jointly undertaking the investment risk"; therefore, business tax shall be levied in accordance with the tax category of "transferring invisible assets"; its business volume should be all the income actually gained, including charges not included in the calculated prices; the tax payment schedule should be the very day when the income is gained.
At the same time, tax shall also be levied on the sales of commercial resident. If the method of distributing houses (including the distribution of area) which are then sold respectively by each party is adopted, then business tax shall be levied on the incomes from the sales of commodity houses by both Chinese and foreign parties in accordance with the stipulation of "selling immovable property"; if the method of unified sales of houses and redistribution of sales income is adopted, then business tax is levied on the income from unified sales of commodity houses in accordance with the stipulation of "selling immovable property"; if the method of paying fixed profits to the Chinese party is adopted, then business tax is levied on all the incomes gained by the foreign party from the sales of commodity houses in accordance with the stipulation of "selling immovable property".
[Related Laws & Regulations]
Official Reply on the Question Concerning the Levy of Business Tax on Sino-Foreign Cooperative Development of Real Estate (State Administration of Taxation, 6th December 1994)
Foreign Exchange Administration
Provisional Deposit Account
A foreign investor who wants to pay land deposit to related administrative agencies of land before the establishment of Foreign Invested Enterprises could apply to State Administration of Foreign Exchange (‘SAFE’) for opening a “Provisional Land Deposit Account”. This provisional account could be used to keep remitted foreign exchange for paying land deposit, and foreign investors should pay land deposit to related administrative agencies of land through this account.
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