The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") have recently issued the Announcement on Clarifying the Value-added Tax Policies for Lease of State-owned Farmland and Others (the "Announcement"), immediately effective from the date of issuance.
The Announcement reads that leasing state-owned farmland by a taxpayer to agricultural producers for agricultural production purposes will be exempt from value-added tax (VAT). In addition, the Announcement expressly states that, where a real estate developer that is a general taxpayer proceeds with further development of an uncompleted existing project it has taken over, and then sells real property filed in its own name, such project should be regarded as an existing real estate project and the developer may opt to calculate and pay VAT at the rate of 5% on a deemed basis under the simplified calculation method. The Announcement also stipulates that, where an insurance company uses the unrefunded business tax to offset VAT payable for future months, pursuant to Subparagraph 3 of Article 4 of the Circular of the Ministry of Finance and the State Taxation Administration on Clarifying the Exemption of Elderly Care Agencies from Value-added Tax and Other Policies, it may submit to the competent tax authority an application for a lump-sum refund of the surplus business tax uncredited by December 31, 2020.