Announcement of the State Administration of Taxation on Promulgating the Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Operating Leasing Services Provided by Taxpayers

　　Announcement of the State Administration of Taxation [2016] No.16

　　March 31, 2016

　　The State Administration of Taxation ("SAT") has formulated the Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Operating Leasing Services Provided by Taxpayers, which are hereby promulgated and become effective May 1, 2016.

　　The Announcement is hereby given.

　　Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Operating Leasing Services Provided by Taxpayers

　　Article 1 These Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Operating Leasing Services Provided by Taxpayers (hereinafter referred to as these "Measures") are formulated in accordance with the Circular of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (Cai Shui [2016] No.36) as well as the current provisions on value-added tax ("VAT").

　　Article 2 These Measures shall apply to the lease by taxpayers of the real estate obtained by them by way of operating leases (hereinafter referred to as the "lease of real estate").
　　The obtained real estate includes the real estate obtained by means of direct purchase, acceptance of donations and equity investment, self-construction, debt payment or otherwise.
　　These Measures shall not apply to the provision of road access services by taxpayers.

　　Article 3 The lease of real estate by a general taxpayer shall be subject to VAT in accordance with the following provisions:
　　1. In case that a general taxpayer leases the real estate obtained by it prior to April 30, 2016, it may adopt the simple tax calculation method and calculate the tax payable at a levy rate of 5%.
　　In case that the real estate is located in a county (city or district) other than the place where the taxpayer is located, the taxpayer shall prepay tax to the competent SAT office at the place where the real estate is located according to the above tax calculation method and file a tax return to the competent SAT office at the place where the taxpayer is located.
　　In case that the real estate is located in the county (city or district) where the taxpayer is located, the taxpayer shall file a tax return to the competent SAT office at the place where the taxpayer is located.
　　2. In case that a general taxpayer leases the real estate obtained by it after May 1, 2016, the tax shall be calculated according to the general tax calculation method.
　　In case that the real estate is located in a county (city or district) other than the place where the taxpayer is located, the taxpayer shall prepay tax at a pre-payment rate of 3% to the competent SAT office at the place where the real estate is located and file a tax return to the competent SAT office at the place where the taxpayer is located.
　　In case that the real estate is located in the county (city or district) where the taxpayer is located, the taxpayer shall file a tax return to the competent SAT office at the place where the taxpayer is located.
　　In case that a general taxpayer leases the real estate obtained by it prior to April 30, 2016 and the lease is subject to tax calculated according to the general tax calculation method, the aforementioned provisions shall apply.

　　Article 4 The lease of real estate by a small-scale taxpayer shall be subject to VAT in accordance with the following provisions:
　　1. In case that an entity or individual business leases real estate (excluding any house leased by an individual business), the tax payable shall be calculated at a levy rate of 5%. In case that an individual business leases a house, the tax payable shall be calculated at a reduced levy rate of 1.5% rather than the original 5%.
　　In case that the real estate is located in a county (city or district) other than the place where the taxpayer is located, the taxpayer shall prepay tax to the competent SAT office at the place where the real estate is located and file a tax return to the competent SAT office at the place where the taxpayer is located according to the above tax calculation method.
　　In case that the real estate is located in the county (city or district) where the taxpayer is located, the taxpayer shall file a tax return to the competent SAT office at the place where the taxpayer is located.
　　2. In case other individuals lease real estate (excluding houses), the tax payable shall be calculated at a levy rate of 5%, and a tax return shall be filed with the competent local taxation bureau at the place where the real estate is located. In case other individuals lease houses, the tax payable shall be calculated at a reduced levy rate of 1.5% rather than the original 5%, and a tax return shall be filed with the competent local taxation bureau at the place where the real estate is located.

　　Article 5 In case that the real estate is located in a municipality directly under the Central Government or a city specifically designated in the state plan where the taxpayer is located but in a different county (city or district), the competent SAT office of such municipality directly under the Central Government or city specifically designated in the state plan shall decide whether the prepayment of tax is made at the place where the real estate is located.

　　Article 6 In case that a taxpayer leasing real estate is required to prepay tax in accordance with these Measures, such taxpayer shall prepay tax in the tax declaration month following the month when the rent is obtained or within the tax payment period determined by the competent SAT office at the place where the real estate is located.

　　Article 7 Calculation of the tax pre-payable
　　1. In case that the general tax calculation method applies to the lease of real estate by a taxpayer, the tax pre-payable shall be calculated according to the following formula:
　　Tax pre-payable = tax-inclusive sales amount / (1 + 11%) × 3%
　　2. In case that the simple tax calculation method applies to the lease of real estate by a taxpayer, the tax pre-payable shall be calculated according to the following formula, except for the lease of a house by an individual:
　　Tax pre-payable = tax-inclusive sales amount / (1 + 5%) × 5%
　　3. The tax pre-payable on the lease of a house by an individual business shall be calculated according to the following formula:
　　Tax pre-payable = tax-inclusive sales amount / (1 + 5%) × 1.5%

　　Article 8 The tax pre-payable on the lease of real estate by other individuals shall be calculated according to the following formulas:
　　1. Lease of houses:
　　Tax payable = tax-inclusive sales amount / (1 + 5%) × 1.5%
　　2. Lease of non-houses:
　　Tax payable = tax-inclusive sales amount / (1 + 5%) × 5%

　　Article 9 When an entity or individual business that leases real estate prepays tax to the competent SAT office at the place where the real estate is located in accordance with these Measures, such entity or business shall fill in the Statement of Value-added Tax Prepayments.

　　Article 10 The VAT prepaid by an entity or individual business that leases real estate to the competent SAT office at the place where the real estate is located may be deducted from the VAT payable for the current period; any surplus after deduction may be carried forward to the next period for further deduction.
　　If a taxpayer deducts the tax payable from the prepaid tax, the tax payment voucher shall be used as the legal and valid certificate.

　　Article 11 If an entity or individual business recognized as a small-scale taxpayer leases real estate and cannot issue VAT invoices by itself, the taxpayer may request the competent SAT office at the place where the real estate is located to issue VAT invoices on its behalf.
　　Other individuals leasing real estate may request the competent local taxation bureau at the place where the real estate is located to issue VAT invoices.

　　Article 12 A taxpayer leasing real estate to any other individual shall not issue or apply for the issue of special VAT invoices.

　　Article 13 If a taxpayer that leases real estate shall prepay tax to the competent SAT office at the place where the real estate is located in accordance with these Measures but fails to do so within six months following the month when tax prepayment is required, the competent SAT office at the place where the taxpayer is located shall handle the issue in accordance with the Law of the People's Republic of China on the Administration of Tax Levying and the relevant provisions.
　　If a taxpayer that leases real estate fails to pay tax in accordance with these Measures, the competent tax authority shall handle the issue in accordance with the Law of the People's Republic of China on the Administration of Tax Levying and the relevant provisions.