China unveils tax incentives for struggling property market

The Chinese government has implemented new tax incentives aimed at stimulating the ailing property market. The move comes as authorities seek to bolster demand and alleviate the financial pressures faced by property developers.

The Ministry of Finance announced a series of measures, including expanding the eligibility for the one per cent deed tax to cover apartments up to 140 square metres.

Additionally, the minimum pre-collection rate for land value-added tax will be reduced by 0.5 percentage points.

Furthermore, residents will be exempt from VAT when selling their homes after two years of ownership. This exemption will also apply to properties in the four first-tier cities: Beijing, Shanghai, Shenzhen, and Guangzhou.

The Chinese property market has been grappling with a prolonged downturn since 2021, significantly impacting the country’s economic growth. In response, authorities introduced property easing measures, such as reducing the minimum down payment ratio to 15 per cent for all housing categories and easing home purchase restrictions.

Moody’s Ratings stated that these measures are expected to limit the decline in national contracted sales value in the next 12-18 months and mitigate the impact of a high base in the first half of 2023 by 2025.

Attribution: Reuters

Subediting: M. S. Salama