I. Provisions of relevant documents

(1) Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Land Value-added Tax1995:6Article 9: In case a taxpayer develops or transfers real estate in batches after receiving the land use right in parcels, the amount deducted may be calculated and apportioned according to the proportion of the area of the land use right transferred to the total area, or according to the building area, or in other ways confirmed by the tax authorities.

2. Notice of the State Administration of Taxation on printing and distributing the Administrative Regulations for the Liquidation of Land Value-added Tax (2009:91Article 21 stipulates that taxpayers who develop projects in stages or at the same time, or build different types of real estate in the same project, shall share the common costs and expenses according to the beneficiaries and adopt a reasonable distribution method.

(3) Announcement of the Local Taxation Bureau of Jiangsu Province on Business Issues related to Land value-added Tax (Tax Regulations of Jiangsu Province [2012:1Article 4 "Cost Apportionment of Different Types of real Estate in the same Development Project" stipulates: If different types of real estate are constructed in the same development project, the amount paid for obtaining the right to the use of the land and the compensation fees for land expropriation and demolition shall be apportioned according to the proportion of the building area of this type of real estate in the total building area of the project(Hereinafter referred to as "land cost"). However, for different types of real estate with relatively independent land area, the land cost should be calculated according to the proportion of the land area of this type of real estate to the total land area of the project.

Official interpretation of the Provincial Bureau: According to the provisions of the "Announcement", the allocation of land costs should be divided into two steps: the first step, the land cost should be calculated according to the proportion of the actual area of the type of real estate in the total area of the project according to the different types of real estate that occupy a relatively independent area (generally refers to roads, walls, etc.). The second step is to determine the total land cost of different types of residual mixed real estate, and then allocate the land cost according to the proportion of the building area of a certain type of real estate in the total building area of the project.

(4) Announcement of Jiangsu Provincial Local Taxation Bureau on Some Issues concerning Land value-added Tax (Suzhou Tax Regulations [2015:8Article 2 "On the Issue of Land Cost Apportionment" stipulates: When the land cost is apportioned between different liquidation units or different types of real estate in the same liquidation unit, if it can be directly collected, it shall be directly included in the land cost of the liquidation unit or this type of real estate; If it cannot be directly collected, the apportionment may be calculated according to the floor area method or other reasonable methods recognized by the tax authorities.

Official interpretation of Provincial Bureau: This announcement clarifies the apportionment method of land cost between different liquidation units and different types of real estate. For those that can be directly collected, the method of direct collection shall be applied; for those that cannot be directly collected, the method of building area, the method of covering area, the method of coefficient of basic land price and other reasonable methods recognized by the tax authorities shall be used to calculate and apportion.

2. Requirements of Provincial Bureau meeting

(I) The option of allocation method. The above provisions for the land value-added tax liquidation cost allocation method to give the choice of space, as long as it is a reasonable method can be adopted by enterprises. Tax authorities cannot force a method of apportionment on companies without their consent.

(2) The problem of superimposition of allocation methods. According to the regulations of the General Administration, the common cost should be apportioned according to the beneficiaries using a reasonable distribution method. According to the spirit of the provincial bureau document, the apportionment method can be used superimposed. For example, occupy a relatively independent area (such as commercial streets, villas) first use the land area method allocation, for mixed construction of the re-use building area method allocation.

(3) Accreditation of tax authorities. According to the provisions of the documents of the General Administration and the provincial bureau as well as the requirements of the provincial bureau meeting, if the tax authority does not approve the enterprise apportionment method, the reasons for its disapproval should be clear, legal and reasonable.

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