Laws of the People's Republic of China

    Article 1  These Regulations are formulated with a view to standardizing
the order of land and real estate market transactions, to reasonably adjusting
the benefit from land appreciation and to safeguarding the rights and
interests of the State.

    Article 2  All units and individuals receiving income from the transfer of
State-owned land use rights, above-ground structures and their attached
facilities (hereinafter referred to as "transfer of real estate"), shall be
taxpayers of the Land Appreciation Tax (hereinafter referred to as
"taxpayers") and shall pay Land Appreciation Tax in accordance with these
Regulations.

    Article 3  Land Appreciation Tax shall be assessed according to the
appreciation amount derived by the taxpayer on the transfer of real estate and
the tax rates prescribed in Article 7 of these Regulations.

    Article 4  The appreciation amount shall be the balance of proceeds
received by the taxpayer on the transfer of real estate, after deducting the
sum of deductible items as prescribed in Article 6 of these Regulations.

    Article 5  Proceeds received by the taxpayer on the transfer of real
estate shall include monetary proceeds, proceeds in kind and other proceeds.

    Article 6  The deductible items in computing the appreciation amount are
as follows:

    (1) The sum paid for the acquisition of land use rights;

    (2) Costs and expenses for the development of land;

    (3) Costs and expenses for the construction of new buildings and
facilities, or the assessed value for used properties and buildings;

    (4) The taxes related to the transfer of real estate;

    (5) Other deductible items as stipulated by the Ministry of Finance.

    Article 7  Land Appreciation Tax shall adopt four level progressive rates
as follows:

    For that part of the appreciation amount not exceeding 50% of the sum of
deductible items, the tax rate shall be 30%.

    For that part of the appreciation amount exceeding 50%, but not exceeding
100%, of the sum of deductible items, the tax rate shall be 40%.

    For that part of the appreciation amount exceeding 100%, but not exceeding
200%, of the sum of deductible items, the tax rate ahall be 50%.

    For that part of the appreciation amount exceeding 200% of the sum of
deductible items, the tax rate shall be 60%.

    Article 8  Land Appreciation Tax shall be exempt under any one of the
following circumstances:

    (1) Taxpayers constructing ordinary standard residences for sale, where
the appreciation amount does not exceed 20% of the sum of deductible items;

    (2) Real estate requisitioned and repossessed according to law due to the
construction requirements of the State.

    Article 9  For taxpayers under any one of the following circumstances, the
tax shall be assessed according to the assessed value of the real estate:

    (1) Concealment or false reporting on the real estate transaction price;

    (2) Providing false sums of deductible items;

    (3) The transfer price of real estate is lower than the assessed value
without proper justification.

    Article 10  Taxpayers shall report the tax to the local competent tax
authorities where the real estate is located within seven days of signing the
real estate transfer agreement, and pay the Land Appreciation Tax within the
period specified by the tax authorities.

    Article 11  Land Appreciation Tax shall be collected by the tax
authorities. The department for land administration and the department for
real estate administration shall provide the tax authorities with relevant
information, and assist the tax authorities in the collection of the Land
Appreciation Tax pursuant to the law.

    Article 12  For taxpayers that fail to pay the Land Appreciation Tax
according to these Regulations, the department for land administration and the
department for real estate administration shall not process the relevant title
change procedures.

    Article 13  The collection and administration of Land Appreciation Tax
shall be conducted in accordance with the relevant provisions of the Law of
the People's Republic of China on Tax Collection and Administmtion and these
Regulations.

    Article 14  The Ministry of Finance shall be responsible for the
interpretation of these Regulations and for the formulation of the rules for
the implementation of these Regulations.

    Article 15  These Regulations shall come into effect from January 1, 1994.
The measures of different regions for the collection of land appreciation fees
that contravene these Regulations shall cease to be implemented as of the same
date.