Overview

As the government's latest effort to cool the residential property market, the State Administration of Taxation of China issued a circular in May to strengthen the settlement of land appreciation tax.

In the past two years, China’s housing prices in major cities have surged, driven up by hefty interest rate cuts, aggressive credit extension and favorable home purchasing policies, many of which were introduced in 2008 to combat the global financial crisis. However, given the overheated property market and the political significance of providing affordable housing, the Chinese government is now determined to curb the rising residential housing prices. Circular 220 clarified a number of issues that may arise in the process of LAT settlement. Such clarification may help the local authorities in the LAT collection process.

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