Editor's note: In recent years, the real estate industry has been affected by many factors, with declining performance and tight capital chain. The phenomenon of real estate development enterprises defaulting on the construction unit's project payment has increased, and the impact of most real estate enterprises in a state of tax arrears has been superimposed, and the tax authorities and real estate registration departments often refuse to handle the housing transfer procedures for the construction unit. What's more, they are required to pay taxes on behalf of the real estate enterprises, which makes the construction units that have already suffered losses even worse. This article will discuss how construction units can deal with the difficulties on the road to the transfer of debts with real estate, and give professional legal relief suggestions in combination with tax policies and collection and management practices.
01
Case introduction: it is difficult to transfer the property with the debt
Company A is the elevator engineering contractor of Century Jiayuan project of B real estate company, responsible for the elevator equipment and installation engineering of the project, according to the contract, the total contract amount is 40 million yuan, and the contract is signed Company A receives a down payment of 4 million yuan, and the specific payment terms are as follows. When the project was 50% completed, Company B did not pay the contract payment, and in view of the repeated cooperation between the two parties and the good credit of Company B, Company A continued the construction until it was basically completed.
In the early stage of completion, the market broke out that Company B could not repay the principal and interest of the due bonds, and Company A immediately contacted Company B, and after several rounds of negotiations, the two parties reached an agreement on "repaying debts with housing": Company B used 15 properties with a market value of about 30 million yuan to offset the remaining project payment of 36 million yuan, and assisted Party A in handling the transfer procedures. One month later, Company B was classified as an abnormal account by the competent tax authorities and could not issue invoices for the time being.
Subsequently, Company A proceeded to handle the transfer of ownership of the real estate, but the real estate registration department refused to handle the transfer procedures on the grounds that the subject property had not paid the relevant taxes. Company A learned from the real estate registration department that the transferee needs to declare and pay the deed tax to handle the house transfer procedures, and the transfer can only be handled with the deed tax payment certificate. Company A then applied to the tax authority where the house was located for the payment of deed tax.
However, the local tax authorities rejected Company A's application for deed tax declaration and proposed: 1. The housing price of 30 million yuan in the "housing for debt" agreement negotiated by the two parties was unfair, and it was about 40 million yuan according to the market price of the same period in the same period; Company A was unable to bear the huge tax burden owed by Company B, and the house transfer procedures could not be completed for a long time, resulting in the difficulty of realizing the project payment and falling into serious business difficulties.
02
What tax payment documents do the parties need to submit when the house is transferred?
In the above case, is there a legal basis for the refusal of the immovable property registration department to go through the transfer procedures on the grounds that the relevant taxes have not been paid for the subject property?
Paragraph 1 of Article 16 of the Provisional Regulations on the Registration of Immovable Property stipulates that: "The applicant shall submit the following materials and shall be responsible for the authenticity of the application materials:
(1) An application for registration;
(2) The applicant's or agent's identification materials and power of attorney;
(3) Relevant materials proving the source of immovable property ownership, documents proving the reason for registration, and certificates of immovable property ownership;
(4) Materials such as the site, spatial boundaries, and area of immovable property;
(5) Explanatory materials on the interests of others;
(6) Other materials provided for by laws, administrative regulations, and detailed rules for the implementation of these Regulations. ”。
Although the above provisions of the Regulations do not expressly state that the applicant shall submit a tax payment certificate, the sixth catch-all clause gives the Detailed Rules of the Regulations the authority to require the parties to provide additional materials. The requirement for the applicant to submit proof of tax payment is specified in the implementation rules, and the implementation rules also stipulate that the immovable property registration authority shall inspect the relevant tax payment certificates. The relevant terms are as follows:
Article 38 of the Detailed Rules for the Implementation of the Provisional Regulations on the Registration of Immovable Property stipulates that: "Those who apply for registration of the right to use state-owned construction land and the transfer of ownership of houses shall submit the following materials according to different circumstances:
(1) Certificate of ownership of immovable property;
(2) Contracts for sale, exchange, or gift;
(3) Materials inherited or bequeathed;
(4) Split or merger agreements;
(5) Legal documents effective by the people's courts or arbitration commissions;
(6) Approval documents of the people's governments or competent departments that have the power to approve;
(7) Proof of payment of relevant taxes and fees;
(8) Other necessary materials. ”
Article 15 of the Detailed Rules for the Implementation of the Interim Regulations on the Registration of Immovable Property stipulates that: "After accepting an application for registration of immovable property, the immovable property registration authority shall also inspect the following contents:
(1) Whether the identity materials of the applicant and the entrusted agent, as well as the power of attorney, are consistent with the subject of the application;
(B) the ownership of the source of the materials or registration reasons for the document and the content of the application for registration is consistent;
(3) Whether the results of the title survey such as the real estate boundary, spatial boundary, and area are complete, whether the ownership is clear, whether the boundary address is clear, and whether the area is accurate;
(4) Whether the tax payment or payment vouchers provided for by laws and administrative regulations are complete. ”
According to the above provisions, when a housing transaction applies to the immovable property registration authority for the registration of housing transfer, it shall submit tax payment certification materials in accordance with the regulations. The next question is, what kind of tax payment certificates do the property dealers need to submit?
Article 6 of the Notice of the State Administration of Taxation, the Ministry of Finance and the Ministry of Construction on Strengthening the Administration of Real Estate Taxation (Guo Shui Fa [2005] No. 89) stipulates that: "When handling the registration of real estate ownership, the municipal and county real estate management departments shall strictly follow the provisions of the Provisional Regulations of the People's Republic of China on Deed Tax and the Provisional Regulations of the People's Republic of China on Land Appreciation Tax, and require the issuance of tax payment (or reduction) certificates; (Editor's note: The Provisional Regulations on Deed Tax in this article have been replaced by the Deed Tax Law)
Article 10 of the Deed Tax Law of the People's Republic of China stipulates that "taxpayers shall declare and pay deed tax before going through the registration procedures for land and house ownership in accordance with the law. Article 11 stipulates that "after the taxpayer has handled the tax payment matters, the tax authorities shall issue a deed tax payment certificate." When a taxpayer registers the ownership of land or a house, the immovable property registration agency shall inspect the deed tax payment, tax reduction and exemption vouchers or relevant information. If the deed tax is not paid in accordance with the regulations, the real estate registration authority shall not handle the registration of land and house ownership. ”
Article 12 of the Provisional Regulations of the People's Republic of China on Land Appreciation Tax stipulates that: "If a taxpayer fails to pay Land Appreciation Tax in accordance with these Regulations, the land management department and the real estate management department shall not go through the relevant ownership change procedures. ”
It can be seen that when the registration of the transfer of housing ownership, that is, the application for the transfer of housing ownership, there are mainly two types of tax payment certificates that the transaction applicant should submit, one is the LAT payment certificate, and the other is the deed tax payment certificate.
03
In the case of mortgage payment, why is it difficult for the construction unit to obtain the tax payment certificate required for the transfer?
As mentioned above, the construction unit is required to submit the LAT payment certificate and the deed tax payment certificate when handling the transfer of ownership of the house. From the perspective of the existing tax collection and management policies, if a real estate enterprise uses a real estate that has not yet met the conditions for LAT liquidation, the construction unit does not need to obtain and submit a LAT payment certificate, while it is difficult for the construction party to obtain the deed tax payment certificate if the real estate enterprise is unable to issue invoices and lacks the basis for deed tax calculation. The specific analysis is as follows:
1. When the real estate that does not meet the conditions for land tax increase liquidation is used to settle debts, it is not necessary to provide a certificate of land tax payment
According to the Detailed Rules for the Implementation of the Provisional Regulations on Land Appreciation Tax and related provisions, there are two ways to levy LAT on real estate enterprise development projects: prepayment in the early stage and liquidation in the later stage. After the real estate enterprise obtains the real estate sales income, it shall be paid in advance on a quarterly basis, and the LAT liquidation shall be handled when the sales and sales of the project are basically completed, and the tax authorities shall review the liquidation results after the liquidation declaration, and finally pay the LAT tax. That is, the LAT of real estate development projects is not paid according to a single transaction, but according to the sales situation and the project as a whole. Therefore, it is not possible to issue a tax payment certificate when the transaction is completed for the transaction of using part of the real estate in the real estate development project to offset the debt. In the practice of collection and administration, some local governments have issued documents to no longer require the submission of LAT payment certificates when handling changes in real estate ownership.
Take Beijing as an example. According to Article 3 of the Notice of the Beijing Local Taxation Bureau on Issues Concerning the Improvement of the Management System for LAT Tax-related Certificates (Jing Di Shui Di [2010] No. 124), "Taxpayers who need to go through the procedures for the transfer and change of real estate ownership within the scope of Beijing shall apply to the competent tax authorities for the issuance of LAT tax-related certificates. However, the following cases are excluded: "...... (2) The real estate development enterprise sells the real estate that shall be subject to LAT liquidation".
2. When a real estate enterprise refuses to issue an invoice in arrears, it cannot pay the tax due to the unclear basis of the deed tax
According to Article 2 of the Deed Tax Law, the construction unit, as the transferee of the real estate, is the taxpayer of the deed tax. However, the reality is that if a real estate enterprise refuses to issue a housing sales invoice due to the rupture of the capital chain, it is difficult for the in-charge tax authorities to determine the fairness of the real estate price in the "housing for debt" agreement only on the basis of the "housing for debt" agreement reached by the parties to the transaction privately. In the case that the transaction property price cannot be determined, which is the tax basis, it is difficult for the transferee to obtain the deed tax payment certificate. In addition, due to the impact of the "ticket-controlled tax" collection and administration, if the transferee obtains an invoice to prove that the VAT payable by the transferor in the "mortgage for debt" transaction has been confirmed, the transferor will pay VAT under normal circumstances. However, if the real estate enterprise is unable to issue invoices, if the deed tax collection department only handles the deed tax payment certificate according to the "housing for debt" agreement, it may lead to the loss of VAT tax. Therefore, from the perspective of tax collection and management, the "ticket-controlled tax" method of collection and management also makes it difficult for the transferee to obtain the deed tax payment certificate.
04
How to solve the problem of deed tax declaration and payment by the construction party
Based on the above analysis, it is difficult for the transferee to obtain the deed tax payment certificate, first, the price of the real estate is not recognized, and second, the tax authorities are restricted by the regulatory mode of "tax control by ticket". How to solve this dilemma?
According to Article 4 of the Deed Tax Law of the People's Republic of China, "if the difference between the transaction price and the swap price declared by the taxpayer is obviously low and there is no justifiable reason, the tax authorities shall verify and verify it in accordance with the provisions of the Law of the People's Republic of China on the Administration of Tax Collection." Therefore, the construction unit needs to obtain a certificate of reasonableness of the price of the mortgaged property. According to Article 1 of the Announcement of the State Administration of Taxation on Issues Concerning the Declaration of Deed Tax Returns (Announcement No. 67 of 2015 of the State Administration of Taxation), "if the ownership of land or houses is transferred according to the effective legal documents of the people's court and the arbitration commission, and the taxpayer cannot obtain the invoice for the sale of immovable property, the taxpayer may file the deed tax declaration with the original enforcement ruling of the people's court and relevant materials, and the tax authorities shall accept it". The above policy solves the problem that the transferee cannot obtain an invoice to pay the deed tax. In the course of the trial, the court will confirm the authenticity of the business of "repaying debts with housing" between the parties to the transaction and the reasonableness of the real estate price, and even if the price of the real estate determined by the judgment is lower than the market price of the same kind in the same period, there are legitimate reasons and can be used as the basis for taxpayers to declare and pay deed tax. If the tax authorities refuse to go through the deed tax declaration and payment formalities for the transferee, the transferee may file administrative reconsideration, administrative litigation and other legal remedies against the illegal phenomena of the tax authorities' inaction and failure to perform their duties to protect its legitimate rights and interests.
In practice, construction units may also encounter other problems, such as the tax authorities bearing VAT and LAT on behalf of the real estate enterprise, having to submit LAT payment certificates, and still verifying the price of the mortgaged real estate in accordance with the same principle for the same period if the value determined in the judgment document is not recognized. In response to the above problems, the following solutions can be made:
1. In view of the tax authorities' requirement for the construction unit to pay the tax on behalf of the construction unit, the following interpretation can be made: in the transaction link of "repaying debts with housing", the transferee of the real estate is not a taxpayer of value-added tax and land value-added tax, nor is it a withholding agent. According to Article 4 of the Tax Administration Law of the People's Republic of China, "units and individuals with tax liabilities as stipulated by laws and administrative regulations are taxpayers. Units and individuals that are required by laws and administrative regulations to withhold and remit, collect and remit taxes on behalf of others are withholding agents. "The identities of taxpayers and withholding agents are stipulated by laws and administrative regulations, and no individual or entity has the right to change or re-identify. Real estate enterprises are taxpayers of value-added tax and land value-added tax, and if the two parties have not reached an agreement on how to bear the tax burden, the construction unit shall not bear the tax burden of the real estate enterprise. It is illegal for the in-charge tax authorities to unilaterally use the obstacle of tax payment certificate to achieve the purpose of allowing the transferee to pay the tax on behalf of the transferee.
2. For those who are required to submit LAT tax payment certificates, the following responses can be made: for real estate projects that have not yet been liquidated, there is no need to provide tax payment certificates, which have been analyzed in Part II and will not be repeated. In case of any dispute with the tax authorities regarding the requirement to provide LAT payment certificates, relief may be obtained through tax administrative reconsideration or litigation.
3. In response to the taxpayer's provision of the people's court documents, the tax authorities still verify and collect the price of the mortgaged real estate in the same way in the same period, the following responses can be made: the "mortgage for debts" agreement is a debt restructuring agreement reached based on the actual transaction between the two parties, which is a reasonable concession made by the construction unit as the creditor in the case of the real estate enterprise in distress, and is a price confirmed and approved by the court through the trial procedure, which belongs to the situation where the price is low in the Deed Tax Law but there are legitimate reasons. If there is still a dispute between the tax authorities on the price of the mortgaged property, it is recommended to resolve it through administrative reconsideration and litigation.
epilogue
To sum up, the construction unit reduces the loss of the project money by repaying the debt with the house, which is a last resort means of self-help. However, the transfer of real estate is indeed a tricky issue in practice. The mortgage package involves multiple matters and multiple legal relationships, such as debt restructuring, real estate sales, administrative expropriation, and ownership change. The construction unit shall be familiar with the relevant laws and policies, communicate with the tax authorities and the real estate registration department in a reasonable and well-founded manner, and shall fulfill the reasonable requirements of the government authorities in accordance with the law. When encountering unreasonable and illegal demands such as tax payment by relevant departments, they should actively seek professional help from tax lawyers, coordinate civil litigation and arbitration, tax administrative reconsideration, tax administrative litigation and other relief methods, form a systematic and comprehensive legal solution, and more effectively protect their legitimate rights and interests.