The Ministry of Finance ("MOF") and the State Administration of Taxation ("SAT") have recently distributed the Circular on Relevant Deed Tax Policies for Continued Support to Enterprises and Public Institutions for Their System Reform and Reorganization (the "Circular"), effective from January 1, 2018 to December 31, 2020.
The Circular provides for deed policies on a series of matters, including the system reform of enterprises, system reform of public institutions, corporate mergers and acquisitions, corporate divisions, enterprise bankruptcy, transfer of assets, debt-equity-swaps, transfer of land granted by the government or capital subscription with such land, and sale of corporate equities (shares). According to the Circular, where the investor of the former enterprise exists and holds over 75 percent of equities (shares) of the company created after system reform (alteration), and the company created after system reform (alteration) inherits the rights and obligations of the former enterprise, the inheritance of the former enterprise's ownership of land and houses by the company created after the system reform (alteration) is exempt from deed tax. Additionally, the Circular clearly states that no deed tax shall be levied, when an individual or entity inherits a company's equities (shares) in an equity (share) transfer deal without transfer of the ownership of the company's land and houses.