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|Title:||Processing trade in China - profits tax implications on Hong Kong manufacturers||Authors:||Chan, S||Issue Date:||2011||Publisher:||CCH Inc.||Source:||The International tax journal, 2011, v. 37, no. 2, p. 35-47 How to cite?||Journal:||The International tax journal||Abstract:||On May 19, 2009, the State Council released the “Circular on Approval and Transmission of the ‘National Development and Reform Commission, Opinion on Intensifying the Reform of the Economic System in 2009’” (the “Circular”). The Circular stated clearly that reform of the real estate tax system had to be intensified. In addition, it delegated MOF, SAT, the National Development and Reform Commission (NDRC) and the Ministry of Housing and Urban-Rural Development to be responsible for studying the introduction of Real Estate Tax.
There were concerns over government policies to control real estate prices. Investors worried about the impact of policies restricting investment in the property sector and the corresponding effect on the banking industry. Critics also said that the introduction of real estate tax would increase the cost of holding properties. The resulting reduction in demand for properties will affect the desire of property developers in building new residential and commercial buildings. This will affect not only the construction sector, but also those industries relating closing to the real estate business, including coal, steel, cement, and furniture. As a result, the demand for loans from financial institutions will decline. This would have significant negative impact on property market and on the investment atmosphere in securities market. Although in response to media enquiries on the press report, the spokesperson of the SAT replied that no information with regard to the approval was received, the share prices had reflected the bad news. Shortly after the press report on the issue of real estate tax, during the week of April 18-22, 2010, the Shanghai Composite Index had its biggest weekly decline in five months. However, commentators argued that the proposed regulation on real estate tax is not an additional levy but a restructuring of current system of taxes and levies. This article studies the implications of real estate tax on different stakeholders including tenants, owners, investors, property developers and local governments.
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