BEIJING: China is preparing to levy a general tax on commercial property on a trial basis in two central provinces, the official China Securities Journal reported on Tuesday, June 1.
The paper cited an unidentified source as saying that Chen Jie, a senior official with the General Administration of Taxation, had said the provinces of Hubei and Hunan would be the first to start the scheme. Chen was speaking late in 2009 and he gave no time frame, the paper said.
It also cited a source close to the economic planning body in Hubei as saying that it had proposed to the Ministry of Finance to start the trial in the provincial capital, Wuhan.
China has been running simulation programmes since 2003 to prepare for the ad valorem tax, which would replace current levies based on property transactions.
The simulation schemes are taking place in cities including Beijing, Shenzhen and Chongqing.
A raft of media reports in recent months suggesting that China could start levying an annual tax on residential property, with the aim of curbing speculation, has been helping to drive down the stock market.
The State Council, China's cabinet, said at the weekend that it would press ahead with property tax reform this year.
The statement on the government's main portal, www.gov.cn, gave no more details, but Ting Lu, an economist at Bank of America-Merrill Lynch said the message was very clear.
"The central government will push forward, though gradually, reforms on property tax," he said in a note to clients.
Shares in Shanghai ended down 2.4% on Monday, May 31 rounding out the steepest monthly fall since last August on concern over further tightening in the real estate sector. – Reuters
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