Preface

The proper resolution of issues related to the entry of collectively-owned commercial construction land into the market is crucial for determining whether the land can be successfully listed. The new "Land Management Law" and "Regulations for the Implementation of the Land Management Law" do not specify how to determine land prices, how to dispose of and distribute land price payments, and tax issues related to the entry of collectively-owned commercial construction land into the primary market. The consequence is that it directly affects the smooth progress of the listing. This article analyzes the above three major issues in order to find solutions.

In 2013, the "Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reforms" clarified that a unified urban-rural construction land market should be established. Under the premise of complying with planning and land use control, rural collective commercial construction land is allowed to be transferred, leased, and invested as shares, and the same entry, rights, and prices as state-owned land are implemented. In order to achieve the same rights and prices for collective construction land and state-owned construction land to a certain extent, before the collective construction land price evaluation system is fully established, Article 63 of the "Land Management Law" clearly stipulates that the lease and transfer of collective commercial construction land should be implemented with reference to state-owned construction land for similar purposes. Therefore, the issue of how to determine the entry price in the entry process should also be implemented with reference to state-owned construction land.

In the process of granting the right to use state-owned construction land, in order to avoid the loss of state-owned land assets, professional appraisal institutions or appraisers conduct land appraisals based on the conditions of the parcel or the land market and in combination with benchmark land prices. On this basis, the minimum transfer price is comprehensively determined through collective decision-making. When measuring the benchmark land price of state-owned construction land, the following methods are mainly used: Value of the right to use state-owned construction land = land acquisition cost + value-added income + taxes + development costs + other expenses. It can be seen that if collective commercial construction land is to achieve the same price as state-owned construction land, the method for determining its land price should be consistent with that of state-owned construction land.

According to Article 55, Paragraph 2 of the "Land Management Law", "From the date of implementation of this Law, 30% of the land compensation fees for newly added construction land shall be turned over to the central government, and 70% shall be retained by the relevant local people's governments...", the disposal and distribution of land price payments for state-owned construction land are clearly stipulated by law. The "Land Management Law" and "Regulations for the Implementation of the Land Management Law" do not clearly stipulate the disposal and distribution of land price payments for collective commercial construction land. Before the "Land Management Law" and "Regulations for the Implementation of the Land Management Law" were implemented, in April 2016, the "Interim Measures for the Collection, Use and Management of Land Appreciation Income Adjustment Funds for Rural Collective Commercial Construction Land" (Cai Shui [2016] No. 41) issued by the Ministry of Finance and the former Ministry of Land and Resources clearly stipulated that pilot areas should pay adjustment funds to the government at 20% to 50% of the land price payment for collective commercial construction land that enters the market or land appreciation income. The implementation period of these measures was from January 1, 2015 to December 31, 2017, and has now expired. In pilot practice, many pilot cities pay adjustment funds to the government at a certain percentage of the entry transaction price. For example, in the pilot city of Beiliu, the "Implementation Rules for the Collection, Use and Management of Land Appreciation Income Adjustment Funds and Other Fees for Rural Collective Commercial Construction Land in Beiliu City (Revised)" was issued, adjusting the distribution of entry income to the government collecting adjustment funds at 5% to 50% of the total entry income.

The disposal and distribution of collective commercial construction land price payments are related to the balance of interests between the state, the collective, and collective members. Neither the "Land Management Law" nor the "Regulations for the Implementation of the Land Management Law" make clear provisions on the distribution of land transfer fees. The content of the new "Land Management Law" does not involve how to dispose of land transfer fees, which leads to a lack of legal basis for the government to collect a certain percentage of land transfer fees in the process of collective commercial construction land entering the market at the legal level. For the income from the transfer, the law clearly stipulates that it must be clearly agreed in the transfer and lease plan. Therefore, before the issue of the distribution of income from the transfer of collective commercial construction land is resolved, the entry work may not be able to proceed due to the inability to balance the interests of all parties.

In the author's opinion, from the perspective of property rights, the collective is the owner of collective commercial construction land and should independently enjoy the rights to dispose of and benefit from collective commercial construction land in accordance with the law, and the government should not directly participate in the distribution. In order to ensure the interests of the state, according to Article 42 of the "Regulations for the Implementation of the Land Management Law", "Users of collective commercial construction land shall pay the price of collective commercial construction land in a timely manner in accordance with the agreement, and pay relevant taxes and fees in accordance with the law...", the government should solve the distribution problem through reasonable taxation.

Before the implementation of the new "Land Management Law", China prohibited collective commercial construction land from directly entering the market for circulation, which led to the fact that the types of taxes stipulated in China's tax law did not cover the circulation link of collective commercial construction land entering the market. The "Land Management Law" and "Regulations for the Implementation of the Land Management Law" also do not provide detailed regulations on tax and fee issues. The author believes that a new type of collective commercial construction land income tax can be added to the entry link of collective commercial construction land to solve the problem of balancing the distribution of interests between the state and the collective regarding entry. Before the official promulgation of the tax regulations, it is recommended that entry areas issue their own entry fee rules to reserve the portion of the collective commercial construction land price that should be paid to the state.

Conclusion

Since the implementation of the new "Land Management Law" and "Regulations for the Implementation of the Land Management Law", in the actual operation of collective commercial construction land entering the market, solving the problems of how to determine land prices, how to dispose of and distribute land price payments, and tax issues related to the entry of collective commercial construction land is the key to whether the entry can proceed smoothly. Relevant departments should speed up legislation and issue corresponding documents so as to remove obstacles and enable collective commercial construction land to better serve the national rural revitalization strategy.

About the author

He Caibin Lawyer

Deputy Director of the Government Legal Counsel and Administrative Legal Affairs Department of the Law Firm

Master of Laws from Guangxi Normal University, focusing on government legal counsel and administrative legal affairs legal services. He has served as legal counsel for a number of enterprises and government departments, and has conducted many special lectures on administrative legal affairs.