SAT published the Announcement to regulate and standardize the implementation of property gains clauses in the Double Taxation Arrangement.

The Announcement includes the following:

  1. Real property, as mentioned in article 13 (4) of the Sino-Singapore Taxation Agreement and in the Guo Shui Fa [2010] No. 75, must include houses and other buildings used for business or non-business purposes, land use right, as well as the collateral property of the real estate.
  2. Under article 13 (4) of the Sino-Singapore Taxation Agreement, and Guo Shui Fa [2010] No. 75, the company’s property and real estate must be confirmed and priced according to the provisions for asset disposal (not considering liabilities) under current valid accounting systems. However, the value of the land or the land use right of the relevant real estate must not be lower than the current market price of a comparable adjacent or similar area.
  3. The concept defined in Guo Shui Fa [2010] No. 75 on the circumstances in which a Singapore resident's direct or indirect participation in the capital of a Chinese resident company changes/is modified applies in the three situations below:
  • The Singapore resident directly participates in the capital of a Chinese resident company.
  • The Singapore resident indirectly participates in the capital of a Chinese resident company through a monolayer or multilayer company or other entity (including single or multiple participation chains) holding a direct capital relationship of over 10% (inclusive).
  • Other members of the associated group in which the Singapore resident has a significant interest directly participate in the capital of a Chinese resident com-pany or indirectly participate in the capital of a Chinese resident company through a monolayer or multilayer company or other entity (including single or multiple participation chains) holding a direct capital relationship of over 10% (inclusive).

This Announcement will come into effect on the date it is enacted. The 4th section of article 13 (5) in the Clauses Interpretations attached to Guo Shui Fa [2010] No. 75 will be removed simultaneously.

Date of issue: December 31, 2012. Effective date: December 31, 2012.