Anthony Tam interviewed by SCMP on VAT reform
Anthony Tam, Mazars Hong Kong Tax Partner shared his insights on the upcoming VAT reform in the SCMP article "China's plan to extend VAT to property leaves players bracing for impact".
His comments extracted from the article:
""The cost will be higher (for mainland home buyers)," said Anthony Tam, managing director of Mazars Tax Services, adding that whether residential is exempted or not, developers will embed part of the tax increase in their asking prices.
Tam told the South China Morning Post that China should allow developers to deduct the current values of their land parcels in order to avoid double taxation alongside the land appreciation tax.
He added that the government also needs to help developers gap the mismatch of cash flow due to time differences between input and output.
For example, property companies pay VAT when they buy building materials and hire contractors to start construction. These payments will get refunded only when the project is sold or leased. The time gap will be at least a few months, if not a few years, as is the case with hotels or shopping malls. That will be a considerable burden to developers, Tam said.
Even if developers are able to pre-sell projects before construction starts, the inflow of sales revenues and the outflow of VAT payment would still fall in different years, he added."
For more details, please refer to the full interview:
Please click here.
Credits: Langi Chiang, Senior Property Correspondent for South China Morning Post Publishers Ltd.