On December 28th, 2008, the Ministry of Finance and State Administration of Taxation jointly issued a circular “Notice on Certain Deed Tax Policies in respect of Corporate Restructuring and Reorganization”, delineating the exemption of deed tax in certain circumstances as below:
(1) Where the equity of the company is acquired by an entity or individual, and since the ownership of the land, building does not change, deed tax is therefore exempted;
(2) Where two or more companies are merged into one entity and the original investors thereof continue to exist, the new entity inheriting the real properties previously owned by pre-merger entities are exempted to pay deed tax;
(3) Where one company is divided into two or more entities the investors of each of which are the same, the derivative or new entities inheriting the real properties owned by the pre-division entity are exempted to pay deed tax;
(4) Where a state or collective-owned enterprise is sold and then deregistered, if the acquirer properly arranges all the employees of the sold enterprise in accordance with PRC Labor Law and enters into employment contracts of not less than three years with all employees, deed tax in respect of real properties of the sold enterprise is exempted; if the acquirer enters into employment contract of not less than three years with more than 30% of the employees (but not all), deed tax in respect of real properties of the sold enterprise shall be half exempted.
(5) Where an enterprises is deregistered or has gone bankrupt, creditors (including the employees of such enterprise) that accept the real property of the enterprise to set off the relevant debts, are exempted to pay deed tax; in case the real property of this enterprise is conveyed to a non-creditor buyer, such buyer may enjoy the deed tax treatment as described in section (4) above, provided that conditions for such treatment referred to in section (4) above are also met;
(6) In the course of corporate reorganization of an enterprise, the transfer of ownership without consideration between parent company and its fully funded subsidiaries, or between the fully funded subsidiaries of the same parent company, or between an individual and an enterprise or company wholly owned by him or her shall be exempted from deed tax assessment.
However, please note this notice only has a life of three years running from January 1st, 2009 to December 31st, 2011. |
