Effective January 1, 2026! The Announcement of the State Taxation Administration on Several Collection and Administration Standards for Land Appreciation Tax is Officially Released

Editor's Note: Land Appreciation Tax is an important tax for regulating the real estate market and participating in the distribution of land proceeds. The unification and clarification of its collection and administration standards have always been the focus of the industry. For a long time, due to inconsistent implementation standards across regions and unclear connection between final settlement and prepayment, taxpayers have faced many uncertainties in compliance, which has also affected the fairness and efficiency of tax governance to a certain extent. Following the release of the "Draft Announcement on Several Matters Concerning the Collection and Administration of Land Appreciation Tax" on November 29, 2025, the State Taxation Administration officially issued the "Announcement on Several Collection and Administration Standards for Land Appreciation Tax" (Announcement No. 3 of 2026 of the State Taxation Administration, hereinafter referred to as the "Announcement") on January 1, 2026. It clarifies the core collection and administration standards such as the connection between prepayment and final settlement, tax calculation basis, deductible items, and remaining property sales management, and shall come into force on January 1, 2026. This article aims to sort out and analyze the key changes by combining the provisions of the Announcement and official interpretations, so as to provide reference for taxpayers to understand and apply the new regulations.

Article 1 of the Announcement clarifies the rules for determining the start and end dates of the prepayment of Land Appreciation Tax. The start date shall be determined as the earlier of "the date of issuance of the first pre-sale permit" or "the date of obtaining the first pre-sale (sales) income"; crucially, this article defines the end date of the tax period to which the prepayment belongs as "the end date of the previous prepayment tax period when the tax authority accepts the taxpayer's final settlement declaration". Previously, there were significant differences in the implementation standards for the termination time of prepayment across regions: some took "the date when the enterprise meets the final settlement conditions" as the boundary, some anchored to "the date when the enterprise submits the final settlement declaration", and others continued the prepayment until "the date when the tax authority issues the final settlement review conclusion". Such inconsistent standards have brought great compliance difficulties to enterprises operating across regions. This Announcement unifies the end standard of the prepayment period at the national level, which may be significantly different from the policies currently implemented in various regions. Enterprises' tax obligations for prepayment may be extended, which should be fully concerned.

Closely linked to the rules of the prepayment period, Article 3 of the Announcement further clarifies the end time of the collection period for sales income and sales area, which is consistent with the above-mentioned end time of the prepayment period, i.e., "the end date of the prepayment tax period when the tax authority accepts the final settlement declaration". On this basis, Article 6 stipulates that if a taxpayer transfers real estate after this end time, they shall declare and pay Land Appreciation Tax in the manner of remaining property sales. Among them, the income obtained from the transfer of real estate between the end of the prepayment period and the issuance of the final settlement review conclusion shall be declared uniformly in the first tax declaration period after the tax authority issues the final settlement review conclusion. This means that even if the taxpayer has objections to the final settlement review conclusion and initiates reconsideration or litigation, before the final settlement review conclusion notice is revoked, the taxpayer must still calculate the tax payable for the remaining property sales based on the final settlement review conclusion and declare and pay the tax in a timely manner. Up to now, Articles 1, 3, and 6 are interlocking, realizing the connection between the scope of prepayment, final settlement, and remaining property sales at the institutional level, which greatly improves the standardization of collection and administration and the unification of rules. It is a vivid embodiment of the policy objective of "better serving the construction of a unified national market" mentioned at the beginning of the Announcement.

It is easier to understand this logic by combining practical cases. If a real estate development enterprise submits a final settlement declaration on April 15, 2026, the competent tax authority accepts it on May 10, and monthly prepayment is implemented locally, the prepayment period of the project will end on April 30, and the corresponding collection period for sales income and sales area will also end on April 30. The sales income obtained from May 1 will no longer be subject to prepayment, nor will it be included in the final settlement scope, but will be included in the remaining property sales management. When analyzing the draft for comments earlier, the author pointed out that such rules may lead to the unavoidable risk of inaccurate declarations by taxpayers. That is, when the enterprise submits the final settlement declaration on April 15, it cannot predict the possible sales income from April 16 to April 30, resulting in the inherent incompleteness of the initial declaration data, and thus falling into the violation risk not caused by its own fault.

Fortunately, although the Announcement does not directly stipulate a supplementary declaration mechanism in the main text of the provisions, it provides a solution through supporting interpretation cases. A case listed in the official interpretation of the Announcement released by the State Taxation Administration shows that if a company submits final settlement materials on April 30 and the tax authority accepts them on May 8, the end date of the collection of its sales income is April 30. Since the company only collected the sales income up to the end of March when declaring in April, after the tax authority accepts it, the company needs to update the data to the end of April through supplementary declaration. This interpretation case responds to the previous concerns: the deviation of income data caused by the uncertain acceptance time of the tax authority or the error in the company's own income collection is not the subjective fault of the taxpayer. The deviation can only be finally determined after the tax authority officially accepts it. Taxpayers can make up for the deviation by making supplementary declarations as required after acceptance, and will not be identified as false declaration or tax evasion. This case provides a policy-level implementation standard for supplementary declaration, which not only resolves the technical problems arising from institutional connection through supplementary declaration, but also fully protects the legitimate rights and interests of taxpayers, reflecting the rationality and humanization of tax collection and administration.

Article 2 of the Announcement focuses on the unification of the prepayment tax calculation basis, clarifying that when a real estate development enterprise sells self-developed real estate projects in the form of advance receipts, the calculation basis for the prepayment of Land Appreciation Tax = advance receipts ÷ (1 + applicable VAT rate or collection rate). This rule is consistent with the prepayment tax calculation logic of VAT and enterprise income tax, and its core purpose is to unify the calculation standard of the prepayment tax base nationwide. Previously, in practice, there were differences in the implementation standards across regions: some adopted the difference method of "advance receipts - VAT payable in advance", and some allowed taxpayers to choose between the difference method and the price-tax separation method of "advance receipts ÷ (1 + applicable VAT rate or collection rate)". After uniformly adopting the price-tax separation method, it not only eliminates the tax burden difference between regions, but also enables taxpayers to form stable tax burden expectations. At the same time, it provides clear implementation standards for grass-roots tax authorities, further improving policy certainty.

Regarding the long-controversial issue of the deduction of "off-red-line expenditures", Article 4 of the Announcement clarifies that when a taxpayer obtains transferred land, the actual expenditures incurred for constructing public facilities outside the project planning scope as agreed in the land transfer contract and supplementary agreements with people's governments at or above the county level or their relevant departments can be included in the "amount paid to obtain the land use right" for deduction. In practice, to improve regional supporting facilities, local governments often require developers to assume the obligation of constructing public facilities such as municipal roads, community parks, and public schools outside the red line. However, there were great differences in local policies on whether such expenditures could be deducted in the final settlement of Land Appreciation Tax. Some regions explicitly prohibited the deduction, while others required that the deduction could only be made on the premise of the agreement in the land transfer contract. The Announcement elevates the mature practices of some regions to national unified rules and sets four preconditions for deduction: first, the basis of the agreement is the land transfer contract or supplementary agreement, not oral agreement; second, the subject of the agreement is the people's government at or above the county level or its relevant departments; third, the construction content is limited to public facilities, excluding commercial supporting facilities developed by enterprises themselves; fourth, the expenditures have actually been incurred and supported by legal and valid vouchers. These four elements form a complete audit chain, which not only ensures the operability of the policy, but also effectively prevents the abuse of deduction rights. At the same time, it guides enterprises to standardize the retention of relevant materials and reduce compliance risks.

Article 5 of the Announcement optimizes the deduction rules for stamp duty and local education surcharge: first, the stamp duty paid by taxpayers for transferring real estate shall be directly included in the "taxes related to the transfer of real estate" for deduction; second, the local education surcharge paid for transferring real estate shall be treated as taxes for deduction. Compared with the draft for comments, the core change of the official version is the deletion of the restrictive condition that the deduction of stamp duty must be "included in the 'taxes and surcharges' item in accordance with the Accounting Standards for Business Enterprises". This revision returns to the essence of tax deduction, that is, the core of tax deduction is the direct correlation between expenditures and taxable activities, emphasizing that the deduction is based on the actually incurred tax expenditures directly related to the transfer activity, rather than the enterprise's accounting treatment method. This measure not only eliminates the differences in tax treatment caused by different choices of accounting policies, ensuring tax fairness, but also simplifies the burden of proof for taxpayers, making the rules more in line with the principle of taxation.

Article 7 of the Announcement clarifies the calculation rules for the amount of deductible items per unit of remaining property sales: the amount of deductible items per unit construction area for each type of real estate = the total amount of deductible items for that type of real estate determined by the tax authority's review ÷ the saleable construction area of the corresponding type of real estate.

Previously, the expression "deductible items include taxes related to the transfer of real estate" in the draft for comments was ambiguous and did not clarify the period to which the taxes belong, which may lead to inconsistent interpretations across regions. This Announcement specifically clarifies that the calculated amount of deductible items per unit does not include the relevant taxes already collected during the final settlement; the taxes actually incurred in the current period of remaining property sales shall be handled in accordance with the principle of actual deduction. This provision draws on the mature practices of many regions such as Beijing and Hainan, which not only avoids the unreasonable transfer of tax burden during the final settlement period to the remaining property, but also realizes the accurate matching between the taxes of the remaining property and the current income, making the accounting standard clearer and more reasonable.

At the same time, the formula clearly links the amount of deductible items and the saleable construction area to "the corresponding type of real estate", which is inherently consistent with the basic principle of separate final settlement for different types of real estate under Land Appreciation Tax, further improving the rigor of the rules.

Article 8 of the Announcement fills the gap at the national level in the tax exemption policy for remaining property sales, clarifying that the Land Appreciation Tax exemption policy for ordinary standard residential buildings can be extended to the remaining property sales stage. When declaring the remaining property sales, if the current value-added amount of the ordinary standard residential buildings does not exceed 20% of the amount of deductible items, taxpayers can enjoy the exemption; if it exceeds, they shall pay tax in accordance with the regulations. Previously, there were inconsistent implementations across regions on whether the tax exemption policy could be applied to the remaining property sales. Although some provinces and cities such as Beijing, Xiamen, and Guangxi made explorations through local documents, there was no unified national standard. The Announcement elevates the mature local experience to national norms, eliminates regional implementation differences, enables taxpayers to have stable expectations for the exemption of remaining property sales, and effectively reduces tax disputes between tax authorities and enterprises caused by differences in policy understanding.

Conclusion: The Announcement, which comes into force on January 1, 2026, is an important measure at the national level to solve the dilemma of "multiple policies and inconsistent standards" in Land Appreciation Tax and supplement institutional supply. Compared with the draft for comments, the official version adds the expression of "better serving the construction of a unified national market" at the beginning, demonstrating a clear policy orientation. That is, by unifying the core rules such as the connection between prepayment and final settlement, tax calculation basis, deductible items, and remaining property sales management, it maximizes the elimination of institutional barriers formed by regional rule differences, and creates a fair, transparent, and predictable tax environment for real estate development enterprises.

For taxpayers, the new regulations not only bring a unified rule system, but may also mean adjustments and changes to the original local rules and implementation standards. In this regard, enterprises need to take the initiative to adapt to the new collection and administration environment, build a full-process tax risk prevention and control system with professional forces, and realize the reasonable optimization of tax burden under the premise of compliance. The issuance of the Announcement marks a solid step forward in the legalization, standardization, and modernization of Land Appreciation Tax collection and administration, and its smooth implementation relies on the common understanding and coordinated promotion of both tax authorities and taxpayers.