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China has decided to levy a business tax on the full profits from house
sales if owners sell them on within two years of purchase.
Economists say it is a major step towards discouraging real estate
speculation.
The government will also levy a business tax on
the difference between the purchase and resale
price of non-ordinary residential housing, if owners sell up
more than two years after their initial purchase.
However, sales of ordinary homes will not be subject to the business
tax if more than two years pass between purchase and resale.
Wang Zhao, a senior researcher with the State Council Development
Research Centre, said the latest measures, which were announced on
Wednesday in a circular jointly issued by seven government departments,
were targeted at excessive real estate investment and rising housing
prices.
Healthy development of the real estate industry is crucial for economic
and social development, Wang said.
The government needs to use taxes and other economic measures to adjust
the real estate market and strengthen control of housing purchases for
speculative and investment purposes, he said.
China's average housing prices rose 14.4 per cent last year, despite
the government taking a series of macro-control measures, including an
interest rate rise, to cool the market.
Average housing prices rose a further 12.5
per cent year-on-year during the first quarter of this year.
(China Daily) | 
Updated: 2005-05-13 11:04
