Hong Kong, China on property tax rates for the inspiration

[Abstract] development of a healthy real estate market is our livelihood project a very important component of China's real estate (especially to maintain links) tax system today is no longer suitable for the development needs, there is institutional lag behind in recent years to the voice of the real estate tax reform is also growing. real property tax rates in tax is the main Hong Kong tax, the revenue of the Hong Kong Government has an important contribution to the article through the analysis of Hong Kong's tax rates, combined with our reality, made in China property tax system, specific points.

[Keywords] property tax rates, assessment

A status quo of China's real estate tax
In the current real estate tax system in China, most are in the transfer of part of the tax burden, tax burden is very light to maintain links. Current real estate tax policy can not meet the requirements of development of the situation, mainly as follows:
(1) rental housing is still the homeowner property tax for taxpayers, tax collection difficult.

(2) in terms of production and business-occupied real estate, real estate purchase to the original value of 30% of taxable net residual value means unreasonable. The same lot, the same structure, the same area of ​​the property, due to purchase at different times, a great difference between the value of the property, and tax deduction based upon the original value of 30 percent, a big gap to make the tax burden, tax burden is unreasonable.

(3) rental housing to rent for the tax basis, the rent is difficult to determine, resulting in serious loss of tax revenue the one hand, the owner of the house for the purpose of evading taxes, on the other houses to reduce the rent the lessee for the purpose of the two sides will sign an agreement two lease, a lease contract for the actual, the other is to avoid or reduce tax liability and tax authorities to deal with fake contracts and eventually false declarations by taxpayers and lead to revenue loss.

According to the National Bureau of Statistics data show that as of end of December 2008, the national area of ​​164 million square meters of vacant housing is expected in 2011 could reach 300 million to 4 million square meters. So a lot of idle real estate, including a large proportion of rests in the hands of real estate investors.

China's local government tax revenue is mainly derived from sales tax, VAT and corporate income tax revenue from the Statistical Yearbook 2005 can be seen, the nature of property taxes with property tax and urban land use tax together account for local government revenue ratio is about 4.2% property tax for land, housing and other real estate in the taxes levied to maintain the property tax base object is attached to their land and buildings on such real estate, real estate tax base is generally the market value or rent value of the property tax is neither as vulnerable as corporate income tax, the impact of population movements, unlike sales tax, VAT and other turnover tax as highly correlated with the Economic structure of Economic activities less distortion, to give local governments provide stable source of income.


2 rating system in Hong Kong
Tax rates in Hong Kong is a land and property to other real estate owned by an indirect tax levied on it is the taxpayer who owned land and buildings and other real estate owners, but at the time of rental property, then the users tax, if the beneficiaries to pay, can be repaid by the user. Tax rates are in accordance with property tax basis (the reasonable market rental property throughout the year value assessed, and its rate of change almost every year, exempt from rates of the very few buildings, it is the season schedule to pay.

2.1 tax rate and tax rates calculated
Prior to 1999, rates of Hong Kong Government every three years on the rateable value assessed once the year 1999, the Hong Kong Government's annual assessment rates rateable value to reflect changes in property market rent, and with the increase in property appreciation revenue. the 2007-2008 fiscal year, the rates percentage charge rate of 5%, valuation reference date was October 1, 2006.

The amount of rates payable is based on the rateable valuation of the taxable value of the prescribed tax rates, the formula is: Tax rates rateable value × = payable tax.

Rateable value by the Valuation Department, Hong Kong, buildings or property in accordance with reasonable annual rent assessed, estimates of 1 year. Buildings or property valuation rates evaluation method according to the regulations. In general, the rateable rental value of buildings or property is essentially a reflection of the current rental value. If taxpayers disagree with the amount of the Top price, may within 21 days after publication, a written Application to the district court for reconsideration.

2.2 The valuation of taxable property
In calculating the value of the rent due when the property rates, property rental restrictions, vacant position, and the financial position of ratepayers, are not special consideration. Application rental value of the time, we must refer to similar properties in the same district valuation date or near that date, agreed on the open market rent, according to size, location, facilities, quality and management level, adjusted for differences, all types of real estate property, including private and public housing are the same standard here assessed rental value to the Government to pay rates. In general, all real estate properties in Hong Kong must be under the <<Rating Ordinance>> evaluation.

In the valuation methods, commonly used in Hong Kong is "comparative Law", that is the most similar properties in the vicinity of recent records of transactions as a control, coupled with appraisers of these records to make the appropriate adjustments and analysis to determine and make a more accurate assessment value, of course, according to the type of property, valuation needs and objectives of the decision, you can also use other valuation methods, such as the "Investment Law", "profit Law," "residual method" and so on.

Also worth mentioning is that the Hong Kong Government's Land Registry of Hong Kong Government's Land Registry is an independent government department, the equivalent of our institutions, the use of commercial services in the form, providing in accordance with the Land Registration Ordinance, for all land-related File registration of land records service, any person may inspect and so far, there already exist in Hong Kong, Kowloon, New Territories, except registered 593 Yu Wanzong property so that any property transaction records, the situation can be found in the Land Registry to deliver a certain cost of inspection and access to information, which is the implementation of property valuation using "comparative Law" basis, only to master a large number of comparable data in order to use comparative Law, Hong Kong at this point, the government provides a good condition.

2.3 rates of collection and management
Hong Kong Rating and Valuation Department is responsible for the collection of property rates in Hong Kong Rating and quarterly charge, four times a year at the start of the season before the end of the first month payment. Do not pay on time, in the amount of the levy rates 5% penalty if not paid within 6 months, in total on top of the 10% penalty.

Links to free download http://www.hi138.com 2.4 regulation of government tax incentives
New levy rates for the area, and Valuation Department, with a gradual transition to the standard tax rate policy that levy rates for the first year to collect accounts for 50%, 60% second year, third year 70% and so on until the sixth year in 100% Hong Kong SAR Government in the Economic downturn and special difficult circumstances, in order to reduce the burden on ratepayers in the period 1998-2003 introduced a number of breaks: In 1998, then returned rates for the second quarter 1999, exempted from all payers rates for the third quarter of 2002, the amount of free low rates below HK $ 5000 (about 2.3 million of the policy makes about 85 percent of payers in the year without pay rates) in 2003, during the SARS eliminates about 90% of the payers of rates and three-month extension of payment date.


3 Hong Kong system of property tax rates, inspired
3.1 Property tax system will help solve the problem of vacant housing resources
Hong Kong's housing vacancy rates for the number of effective control has played a positive role in the government rates as well as property management and other related costs, under pressure from owners who prefer low-priced rental property will be vacant (the taxes paid by the tenants). Collection property tax can reduce housing vacancy, improve utilization of material wealth of society.

3.2 Property taxes need to gradually establish a mature
Tax rates in Hong Kong from the "Guanci of Xiangyin", through a long historical period and gradually built up. China's property tax can not be a step, must go through the maturity process. The type of properties in Mainland China, the nature of the property holders property for a variety of areas such as the way the situation in the implementation of property tax, you need to consider many interests. you can start some more Economically developed areas of real estate information to fully test the implementation. rate standards in the new region can learn from Hong Kong property tax levy means that over several years to reach pre-set criteria, while the abolition of other tax items to avoid double taxation from a long-term perspective on land and property to apply different tax rates, land of high taxes, low real estate taxes, to achieve land use and incentives to increase local government revenue goal, but in the present, to assess the land and property there were some operational difficulties, because the information is still insufficient, and collection costs are high, so you can be a common assessment, uniform tax rate, to be developed and then try slowly changing patterns.

3.3 The basis for determining the tax base
From the property tax valuation method to see the property tax model can be divided into three basic types: ① area-based assessment, ② the assessment based on market prices, ③ Based on the assessment of rent.

Assessment methods based on market prices to the provinces specifically, a base year is the actual market value as the basis for valuation for the property do not always deal, consider the location and use of specific estimates. Generally every five years revaluation once.

Hong Kong's rates based on annual rental income of property tax based on the latest valuation, assessment once a year. Rent as the assessment methods used, the equivalent of found property tax base is the current income rather than property, which property tax levied on the nature of conflict.

From the future development of China's real estate market outlook, market-based valuation method should be the best choice, because if the rates follow the practice of Hong Kong, to assess the rental income for the autonomy of the housing, the taxpayer will generally agreed that the rent valuation too high, giving rise to the collection and management conflicts, the real estate market ups and downs, the introduction of property tax, assessment department can not change with the price of the real estate market time to adjust, but can be limited to three or five years, the taxable real estate market value assessment, real estate prices in order to fully gain the benefits of appreciation, to maintain tax fairness and impartiality.

At present, the key is levied for both the asymmetric information is too serious, you can consider the establishment of the Hong Kong Land Registry similar institutions, registration of property, regularly updated assessment of the accumulation of sufficient information.

3.4 property tax as a means of macroEconomic control
Tax is the government's means of macroeconomic adjustment in the Asian financial crisis, economic downturn in Hong Kong, as an economic pillar of the real estate industry has been hard hit, according to the Hong Kong government in 2003 annual report, the fourth quarter of 2003 and 1997 Comparing the peak years, property prices fell by an average 62% of private housing rentals average dropped 8% in the period 1998-2003, Hong Kong SAR Government under the law for a number of rates relief or delay the payment of flexibility to adjust these policies so that all sectors of the general benefit of the stabilization and recovery of the Hong Kong economy has played a positive role the property tax, increased government regulation of the industry means and whether the property tax adjustment by means of the direction of macro regulation and control how much intensity, but also need the government based on the overall economic situation, the real estate industry to determine the running state.


References:
[1] Xu Zhuang, improve property tax policy Suggestions [J]. Tax Research, 2004 (4): 81.

[2], macro-Peking University's China Center for Economic Research Group of China property tax Research - theory, policy and feasibility of the [M]. Beijing: Peking University Press, 2007.

[3] Xia Xiao into Hong Kong property tax system inspiration [J]. SAR economy, 2005 (9) :68-69. Links to free download http://www.hi138.com