(财政部、国家税务总局关于进一步支持企业事业单位改制重组有关契税政策的通知)

Following  the  State  Council’s  call  to  introduce  policies  promoting  corporate restructuring in Guofa [2014] No. 14, MoF and SAT released Caishui [2015] No. 37 (“Circular 37”) to exempt from deed tax the transfer of land use rights and building ownership rights in the following corporate transactions:

  1. Under the Chinese Company Law, transforming, (i) unincorporated enterprises into limited liability companies or joint-stock corporations, (ii) limited liability companies into joint-stock corporations, and (iii) joint-stock corporations into limited liability companies, where all the original enterprise’s rights and obligations are inherited and the original investors remain as shareholders in the new enterprise and hold more than a 75% equity interest.
  2. Under relevant Chinese laws, transforming, public institutions into enterprises, where the original investors remain as shareholders in the new enterprise and hold more than a 50% equity interest.
  3. Merging two or more enterprises into one enterprise according to law or as agreed in a contract, where the original investors remain as shareholders in the new enterprise.
  4. Splitting an enterprise into two or more enterprises according to law or as agreed in a contract, without changing the original investors.
  5. Under relevant Chinese laws, creditors of an enterprise in bankruptcy proceedings (including the bankrupt enterprise’s employees) inheriting land use rights and building ownership rights to offset debts.

Non-creditor inheriting land use rights and building ownership rights can be exempt from deed tax if the non-creditor keeps all the bankrupt enterprises’ employees and enters into labor contracts with them for at least three years. Deed tax can be half-exempt if the non-creditor keeps 30% of the bankrupt enterprise’s employees and enters into labor contracts with them for at least three years.

  1. Under other relevant laws, inheriting state-owned land use rights and building ownership rights through administrative rearrangements and transfers carried out by local governments or state-owned asset supervision and administration departments at or above the county level.
  2. Transferring land  use  rights and building ownership rights between enterprises under the same investor, including the transfer between a parent company and its wholly-owned subsidiaries, between the wholly-owned subsidiaries of the same investor, and between an individual and the sole proprietorship enterprise or the one-person limited company established by it.
  3. Inheriting land use rights and building ownership rights through an enterprise carrying out a conversion of debt to equity that is approved by the State Council.

Circular 37 inherits and improves the deed tax exemption policies for corporate restructuring previously provided in Circular Caishui [2012] No.4, which expired on December 31, 2014. Therefore, Circular 37 is effective from January 1, 2015, to December 31, 2017, and any eligible corporate transactions occurring before the date of issue that have not been settled from a tax perspective may benefit from it.

Date of issue: March 31, 2015. Effective date: January 1, 2015.