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China to launch property tax in 2012

BEIJING: China will start levying a property tax in 2012 as part of measures to regulate volatility in the real-estate market.

The annual tax will be introduced in a pilot scheme in several cities, according to the National Business Daily, citing an unidentified participant at a Ministry of Finance seminar.

The planned launch is later and on a smaller scale than originally anticipated by the market. This was because it would be difficult to introduce a nationwide levy, the newspaper said.

In late May, the State Council expressed support for an annual property tax, expected to be targeted at multiple-home owners. But no timetable was announced.

Beijing first suggested introducing the tax in 2003 and chose six cities for a feasibility study. Earlier this year, mainland media reported that Beijing planned a nationwide levy as the government began releasing measures last month to cool escalating property prices.

"The news is not likely to make any immediate impact on the market," said Andy Lee Yiu-chi, head of Centaline Property Agency's Shenzhen branch. "Buyers will not be bothered as long as the tax is not imposed this year."

He said sales activity in Shenzhen had been picking up after developers and individual flat owners cut asking prices of flats in the primary and secondary markets by 8 per cent to 15%.

"The number of flat transactions brokered by Centaline has jumped to more than 40 a day, compared with around 10 in April," Lee said.

The central government has imposed several measures such as tightening property lending and banning third-home loans to cool the red-hot real-estate market. The down-payment requirement for second-home purchases has been increased to 50% from 40% and mortgage rates not lower than 1.1 times the benchmark lending rate have been introduced.

Shares of mainland developers remained stable on Thursday, July 22, with China Overseas Land & Investment falling 0.36% to close the session at HK$16.58 (RM6.83), Guangzhou R&F Properties edging up 0.99% to HK$12.20 and Evergrande Real Estate Group adding 6.6% to HK$2.74. — South China Morning Post
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