Preface

The rural collective economy is an important form of the socialist public ownership economy. The "Constitution" stipulates that the basic economic system in my country's rural areas is a two-tier management system that combines unified management and decentralized operation based on collective land ownership and household contract management. Rural collective economic organizations bear the "unified" aspect of the two-tier management system that combines unified management and decentralized operation. At present, my country's rural "three land" reforms, namely land expropriation, the entry of collectively-owned commercial construction land into the market, and the homestead system reform, have entered a critical stage. These reforms are closely related to the assets of rural collective economic organizations, namely land, forest land, and tidal flats. Resource-based assets, non-operating assets used for public services, and operating assets used for production and investment. These three types of assets constitute an important material foundation for agricultural and rural development. To study the policy of allowing collectively-owned commercial construction land to enter the market, we must first study and master the main content of the reform of the rural collective property rights system, so as to accurately grasp who is responsible for and who pays taxes in the process of developing and utilizing collectively-owned commercial construction land.

In December 2016, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Steadily Advancing the Reform of the Rural Collective Property Rights System" (Zhongfa [2016] No. 37). The opinions aim to clarify the ownership of rural collective property rights and safeguard the rights of members of rural collective economic organizations. The focus is on promoting the reform of collective operating assets, guided by the development of cooperative and joint ventures in various forms such as share cooperation, adhering to the collective ownership of rural land, adhering to the basic status of household contract management, and exploring new forms of realization and operating mechanisms of the collective economy, in order to continuously liberate and develop rural social productive forces.

The opinions made arrangements for giving play to the functions and roles of rural collective economic organizations, emphasizing that rural collective economic organizations are special economic organizations, and the government authorities issue organization registration certificates and handle relevant procedures such as opening bank accounts accordingly in order to carry out business management activities. It is mentioned that rural collective economic organizations can explore the use of idle real estate facilities and collective construction land to develop corresponding industries through independent development, joint ventures and cooperation, etc., provided that they meet the planning requirements.

Article 63 of the revised "Land Management Law" in 2019 stipulates that the transfer and lease of collectively-owned commercial construction land shall be subject to the consent of more than two-thirds of the members of the villagers' meeting of the collective economic organization or more than two-thirds of the villagers' representatives. Article 40 of the "Regulations on the Implementation of the Land Management Law" stipulates that the land owner shall prepare a plan for the transfer and lease of collectively-owned commercial construction land, and the collective economic organization shall form a written opinion and report it to the municipal and county people's governments. It can be seen that the rural collective economic organization is the main body that exercises the rights to develop and utilize collectively-owned commercial construction land on behalf of the land owner.

The villagers' committee is the main organizational form of the villagers' self-government system in my country. It is a grassroots mass autonomous organization for villagers to self-manage, self-educate, and self-serve. According to the "Organic Law of Villagers' Committees", the villagers' committee handles public affairs and public welfare undertakings in the village, mediates civil disputes, assists in maintaining social order, and reflects villagers' opinions, requests and suggestions to the people's government. The village collective economic organization is the main organizational form of the rural collective economic system in my country. According to the "Agricultural Law", the main function of rural collective economic organizations is to do a good job in the management of collective assets, so that collective assets can be reasonably utilized and effectively protected, and to ensure the preservation and appreciation of collective assets.

The village committee and the village collective economic organization are two unaffiliated organizations that generally undertake different functions. However, when it comes to collective land management, the two organizations have overlapping functions. The "Land Management Law" and the "Organic Law of Villagers' Committees" both stipulate that the villagers' committee has the power and responsibility to manage and dispose of collective land and assets; Article 262, Paragraph 1 of the "Civil Code" also stipulates that land and forests, mountains, grasslands, wastelands, tidal flats, etc. owned by the village farmers' collective shall be owned by the village collective economic organization or the villagers' committee to exercise the right of ownership on behalf of the collective in accordance with the law. In practice, although most places have established village collective economic organizations, there are problems of functional virtualization and weakening. In many places, village collective economic organizations exist in name only, and the village committee ultimately has the final say. Therefore, many people regard the village committee as the representative of exercising rural collective ownership, rather than the rural collective economic organization.

To this end, the central government's opinions on the reform of the rural collective property rights system propose to confirm the ownership of rural collective assets to the collective of members of rural collective economic organizations at different levels. If it belongs to the village farmers' collective, the village collective economic organization shall exercise the right of ownership on behalf of the collective. If a collective economic organization has not been established, the villagers' committee shall exercise the right of ownership on behalf of the collective; if it belongs to more than two farmers' collectives in the village, each collective economic organization in the village shall exercise the right of ownership on behalf of the collective. If a collective economic organization has not been established, the villagers' group shall exercise the right of ownership on behalf of the collective; if it belongs to the township farmers' collective, the township collective economic organization shall exercise the right of ownership on behalf of the collective. Villages (groups) with collective unified operating assets, especially urban villages, suburban villages, and economically developed villages, should establish and improve rural collective economic organizations and exercise collective asset ownership in accordance with laws and regulations under the leadership of the village party organization and with the support of the villagers' committee.

With the clarification of the legal entity, organizational form, and market status of collective economic organizations, the concept of the subject of rural collective ownership has gradually become clear. The "Civil Code" stipulates in Chapter 4 on special legal entities that rural collective economic organizations obtain legal person status in accordance with the law. If a village collective economic organization has not been established, the villagers' committee may perform the functions of the village collective economic organization on its behalf in accordance with the law.

According to the "Notice of the Ministry of Agriculture and Rural Affairs, the People's Bank of China, and the State Administration for Market Supervision and Administration on Carrying Out the Registration and Assignment of Codes for Rural Collective Economic Organizations" (Nongjingfa [2018] No. 4), the General Office of the Ministry of Agriculture and Rural Affairs announced the "Rural Collective Economic Organization Registration Certificate" activation and certificate replacement and code assignment rules. A unified style of registration certificate was launched in October 2018, stipulating that the name of the rural collective economic organization shall be composed of the county-level administrative division and reform type in sequence. Among them, the name of the township-level collective economic organization is uniformly "×× County (City, District) ×× Township (Town, Street) Joint Cooperative of Stock Economic Cooperation (Economic Joint Cooperative); the name of the village-level collective economic organization is uniformly "×× County (City, District) ×× Township (Town, Street) ×× Village (Community) Joint Cooperative of Stock Economic Cooperation (Economic Joint Cooperative); the name of the group-level collective economic organization is uniformly "×× County (City, District) ×× Township (Town, Street) ×× Village (Community) ×× Group Cooperative of Stock Economic Cooperation (Economic Cooperative). If there is only a village-level collective economic organization, the name can also be called ×× Village (Community) Stock Economic Cooperative (Economic Cooperative). The name used for the seal and bank account of the rural collective economic organization shall be the same as the name in the registration certificate.

In terms of the property of collective economic organizations, rural collective economic organizations need to fill in relevant information such as collective assets and quantified assets at the time of reform when handling registration and code assignment. Among them, the total area of collective land is the total area of agricultural land, construction land, and unused land owned by the farmers' collective, the total amount of assets is the total amount of book assets such as current assets, agricultural assets, long-term assets, fixed assets, and other assets owned by the farmers' collective, and the total amount of net assets is the difference between the total amount of collective assets and liabilities (that is, owners' equity), the capital is the total amount of capital actually received and invested by the rural collective economic organization, and the total amount of share capital is the amount of quantified collective assets corresponding to all shares at the time of reform of the collective economic organization that has completed the reform of the rural collective property rights system.

 GB 32100-2015《Rules for Coding the Unified Social Credit Code of Legal Persons and Other Organizations》National Standard No. 1 Amendment Sheet divides collective economic organizations into three categories: township, village, and group levels, corresponding to the arrangement of 18-digit unified social credit codes starting with N3, N2, and N1. According to the State Taxation Administration's《Announcement on Revising the Standard for Taxpayer Identification Number Codes》(State Taxation Administration Announcement 2015 No. 66), the above-mentioned 18-digit unified social credit code is used as the sole taxpayer identification number for enterprises and social organizations.

Article 1 of the《Enterprise Income Tax Law》clearly states that enterprises and other organizations that obtain income within the territory of the People's Republic of China are taxpayers of enterprise income tax, and sole proprietorship enterprises and partnership enterprises are not subject to this law. Article 102 of the《Civil Code》stipulates that non-legal person organizations do not have legal person status, including sole proprietorship enterprises and partnership enterprises. Rural collective economic organizations have legal person status and do not conform to the legal attributes of partnership enterprise taxpayer status, nor do they conform to the formal characteristics of sole proprietorship enterprises and individual industrial and commercial households.

Rural collective economic organizations have a unified taxpayer identification number, their own name, organization, address, and property. The scope of business registered according to regulations is uniformly "collective asset management and operation, collective resource development and utilization, agricultural production development and services, financial management and income distribution, etc." They can independently carry out production, operation, and services, and can independently bear corresponding legal and economic responsibilities with their own property. Therefore, from the perspective of taxation, they are qualified tax subjects. Furthermore, according to the《Enterprise Income Tax Law》, in line with the characteristics of other organizations that obtain income, rural collective economic organizations belong to enterprise income tax payers.

In summary, some village collective economic organizations still operate collective construction land in the name of the village committee, which violates relevant laws, regulations, and policy spirit. Some say that using this trick to avoid taxes is even more unreliable. After all, there are no obstacles to opening a collective production and operation bank account now. The《Rural Collective Economic Organization Financial System》, which came into effect in January this year, also stipulates it clearly. It is not convincing to use private accounts for public purposes, and it may even lead to a situation where both people and money are lost! Regarding which taxes, tax rates, who bears them, and what tax policies are involved in the process of collective commercial construction land entering the market, we will analyze them in combination with different development and utilization models in the future. Please pay attention.

Author's Profile

Yu Kun, Tax Lawyer