As a property tax, the tax liability of deed tax should occur when the property right is transferred. For the convenience of collection, the Deed Tax Law advances the time of occurrence of tax liability to the time when the claim is established. In order to reduce the practical conflicts caused by the "tax before certificate", the Deed Tax Law also devises a reconciliation method. However, the tax-enterprise dispute between tax avoidance and anti-tax avoidance will still exist because of this.

On August 11, 2020, the 21st meeting of the Standing Committee of the 13th National People's Congress passed the Deed Tax Law of the People's Republic of China, which will come into effect on September 1, 2021. The deed tax, which has risen to the legal level, still continues the "tax before certificate" provision, and this article attempts to interpret this from the perspective of the tax-debt relationship.

1. Deed tax is a property tax

Property tax is a tax that is taxed on property and paid by the subject who possesses, uses or benefits from property. The Deed Tax Law passed this time ends the dispute over whether deed tax is a property tax or a behavior tax.

Article 1 of the Deed Tax Law clearly states that "the units and individuals who transfer the ownership of land or housing within the territory of the People's Republic of China are taxpayers of deed tax and shall pay deed tax in accordance with the provisions of this Law." The second article follows, "... It does not include the transfer of land contracting and management rights and land operation rights. "The reason for the exclusion is that the above two rights are not property rights, but claims; Article 6, "Deed tax shall be exempted under any of the following circumstances: ... (4) Changes in land or housing ownership between husband and wife during the marriage relationship; (5) The legal heir inherits the ownership of land and housing through inheritance; Since it is exempt, the premise is of course "application", and the change of only property rights and no creditor's rights, that is, no transaction acts, should belong to property tax.

Second, the time of occurrence of deed tax liability from the perspective of tax-debt relationship

With the introduction of the doctrine of debt law into the study of tax law and its gradual and widespread acceptance, the tax relationship between the state and taxpayers is no longer regarded as a power relationship, but as a debt under public law. There are two theoretical explanations for the occurrence of tax debts: one is the tax assessment theory, which holds that the legal relationship of taxation is the relationship between the exercise of the state's financial power, and the tax debt only occurs when the taxing authority makes a tax disposition; The other is the realization of the tax requirements, which holds that the tax debt is the right of the state to claim monetary benefits in accordance with the law, and it occurs when the constituent elements of the tax debt stipulated by the law are realized. At present, it is said that the implementation of tax requirements is widely used in civil law countries.

At the normative level, "tax debt" is not currently a concept in China's tax legislation, and its corresponding concept is "tax liability", and the substantive connotation of the two is the same. The cause of the occurrence, modification and extinction of the legal relationship of tax is a certain act or event carried out by the taxpayer, which can be collectively referred to as a taxable act or taxable fact. Taking deed tax as an example, "bearing the ownership of land and housing" is a taxable fact that occurs in deed tax liability. Article 3 of the original Detailed Rules for Deed and Taxation interpreted "bearing" as "the act of acquiring the ownership of land or housing by way of transfer, purchase, gift, exchange, etc." Based on the fact that the Deed Tax Law treats deed tax as a property tax, the occurrence of deed tax liability is premised on the legal act of acquiring the right to land and housing immovable property. Article 14 of the Property Law of the People's Republic of China stipulates that "the establishment, modification, transfer and extinction of immovable property rights that should be registered in accordance with the provisions of law shall take effect when recorded in the immovable property register". Therefore, in theory, the taxpayer can only collect the deed tax after obtaining the ownership of land and house.

It should be noted that the transfer of ownership is not only based on property rights registration, such as in the Nanjing Intermediate People's Court of Jiangsu Province (2016) Su 01 Xingzhong No. 137 case, although Bailu Company and Changzhou Land and Resources Bureau did not complete the registration of land, they should still bear the deed tax liability.

3. The conflict and coordination between the Deed Tax Law and the tax-debt relationship

1. Advance of tax liability and "tax before certificate"

The time of occurrence of deed tax liability should coincide with the occurrence of "bearing land and housing ownership". Article 9 of the Deed Tax Law, "The time of occurrence of the tax liability of the deed tax is the day on which the taxpayer signs the contract for the transfer of land or housing ownership, or the day on which the taxpayer obtains other certificates with the nature of the contract for the transfer of land or housing ownership." "In civil law, the signing of a contract is a legal act that leads to the creation of a claim rather than a property right, according to which, the time when the deed tax liability arises is the time when the claim is established, then the occurrence of the deed tax liability is also based on the creditor's right as a taxable fact, which obviously contradicts the property right act of "transferring land and house ownership" in Article 1 of the Deed Tax Law, and is not in line with the essence of property tax.

From the perspective of the current tax law policy on the time of occurrence of tax liability, there are two main considerations: first, the ability to pay, whether the taxpayer has been paid in the transaction and therefore has the ability to bear the tax; Second, the convenience of collection and management, for the convenience of collection and management, the tax law can specifically stipulate the time of occurrence of tax obligations and the time of declaration and payment, so as to achieve realistic goals in collection and management. Deed tax is a dynamic property tax (a property tax levied on property whose rights have changed over a certain period of time). ), which also facilitates the feasibility of special provisions on the time when tax liability arises.

The reason why the Deed Tax Law advances the time of occurrence of deed tax liability is to coordinate the relationship with the "tax before certificate" set by the subsequent provisions. According to Article 11 of the Deed Tax Law, "after a taxpayer handles tax matters, the tax authority shall issue a deed tax payment certificate. When taxpayers register land or housing ownership, the real estate registration institution shall check the deed tax payment and tax reduction certificates or relevant information. Where deed tax is not paid in accordance with regulations, the real estate registration agency shall not handle the registration of land or housing ownership. "Only after the taxpayer obtains the deed tax payment certificate can he go through the registration procedures for the change of ownership. If the time of occurrence of the deed tax liability is set as the day of registration of the change of ownership, there will be a contradiction that the tax obligation has not yet occurred but has been fulfilled. In order to avoid this contradiction and insist on "tax first before certificate", the time of occurrence of deed tax liability conflicts with Article 1 of the Deed Tax Law.

2. Reconciling of conflicts

Just as the conflict between the personal income tax liability and the obligation to support and support and the obligation to support and raise education in Article 49, paragraph 3 of the Constitution is resolved (Article 6, paragraph 4 of the Individual Income Tax Law of 2018 clarifies that expenses such as children's education and supporting the elderly are special deductions, not taxable income). The conflict with the taxpayer's rights arising from the early deed tax liability is also resolved by reconciling it in practice.

Article 10 of the Deed Tax Law, "Taxpayers shall declare and pay deed tax before going through the formalities for registering land and housing ownership in accordance with the law." Different from the previous "within 10 days after the occurrence of tax liability", the filing period and the tax payment period are combined into one, and taxpayers can complete the declaration and payment of taxes at one time before going through the land and housing ownership registration procedures. This change realizes the smooth connection between tax application and real estate registration, and can effectively reduce the tax burden and payment burden of taxpayers. However, at the same time, it will cause taxpayers to delay the application of certificates and thus delay the deed tax payment liability.

Article 12 of the Deed Tax Law, "If the ownership transfer contract or certificate of the nature of the ownership transfer contract is not valid, invalid, revoked or dissolved before the registration of land or housing ownership is carried out in accordance with the law, the taxpayer may apply to the tax authority for a refund of the tax paid, and the tax authority shall handle it according to law." This article has undergone major changes compared with the past, and has been called the highlight of the Deed Tax Law by the media.

The author believes that this is only the legitimate right of taxpayers. The tax liability after the occurrence of the creditor act is only the advance tax, and the legal nature of the advance tax should be understood as a cash guarantee, and the situation after which the property act does not occur should be refunded. This kind of "tax refund" is different from the policy tax refund as a tax incentive, and it is different from the technical tax refund due to the wrong application or calculation of the tax law, but restores the legal relationship to the state before the taxable fact occurs, and the tax liability is regarded as not occurring from the beginning.

It should be noted that the premise of Article 12 is "before registering the ownership of land and housing in accordance with the law". From the perspective of contract law theory, the contract that has been performed may still be dissolved and the creditor-debt relationship may be retroactively extinguished, that is, the contract can still be terminated after the registration of land and housing ownership in accordance with the law. However, this does not mean that the retroactive extinction of tax liability necessarily coincides with the retroactive extinction of contracts. At the same time, it can be inferred that if ownership registration has been carried out, but the subsequent transfer of property rights is not established, invalid, or revoked, tax refunds are not supported.

3. Hidden dangers of tax-enterprise disputes

Property tax is calculated on the basis of not the amount of goods transferred or income, but the amount of property owned, used, and benefited by the taxpayer, that is, the amount or value of taxable property. If the contract amount is far from the property value at the time of ownership transfer, how will the tax basis be determined?

In an example that the author encountered, Company A invested in Company B with a piece of land in a certain year, and the market value of the land was 20 million yuan, but it could not handle the transfer because the degree of land development was less than 25%. Ten years later, when the conditions for transfer registration are met, the market value of the land is $400 million. Is the deed tax calculation basis of Company B 20 million yuan or 400 million yuan? Company B will of course claim to pay taxes of 20 million yuan at the time the claim is formed. And whether the tax authority will rely on Article 4 of the Deed Tax Law, "the basis for calculating deed tax: ... Where 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 authority shall approve it in accordance with the provisions of the Law of the People's Republic of China on the Administration of Tax Collection. "Levied at 400 million yuan. In the context of the current tax law norms and judicial decisions reflecting a strong nationalist stance in safeguarding the national treasury, the result may not be too optimistic for Company B (readers can refer to the "Guangzhou Defa Case" here). If it is not clarified in law and practice, it will inevitably lead to disputes between tax avoidance and anti-avoidance of tax enterprises.

IV. Conclusion

Because the tax law embodies the normative purpose of facilitating collection and management and strengthening national tax interests in many aspects, the current tax law system mainly presents as a historical result that gradually accumulates and accumulates, which is like a fog. In the concept of modern tax law, the change of tax law should be transformed from treasury doctrine to ensure national taxation to coordination that balances the interests of taxpayers and national interests. This is also a substantive requirement of tax legislation as a constitutional principle.

Under the condition that the tax collection and management capacity is weak, it is indeed necessary to reduce the cost of tax collection and management and protect the national tax interests. However, after all, violating the theory of tax law and the basic law of the formation of tax obligations will inevitably lead to the complication of some problems in practice, and its rationality is worth reflecting. This provision should gradually withdraw from the historical stage with the development of modern technology, such as the application of blockchain and the enhancement of the ability of tax authorities to control taxpayers' information.

Finally, I conclude with Article 13 of the Deed Tax Law, which integrates improving tax collection and management capabilities and protecting taxpayers' interests. "Tax authorities shall establish mechanisms for sharing and working with relevant departments for deed tax-related information. Relevant departments such as for natural resources, housing and urban-rural construction, civil affairs, and public security shall promptly provide the tax authorities with information related to the transfer of land and housing ownership, and assist the tax authorities in strengthening the collection and management of deed taxes. Tax authorities and their staff shall keep confidential the personal information of taxpayers they learn of in the course of tax collection and management in accordance with law, and must not disclose or illegally provide it to others. ”

References:

1. Li Daqing: "Legal Theological Analysis of Retroactive Elimination of Tax Liability: Starting from a Deed Tax Rebate Case"

2. Zhou Yudong: Legal Analysis and Improvement of the Time of Occurrence of Tax Liability-Taking the Case of Dispute over the Application of Preferential Business Tax Policies for Real Estate Auction and Transfer

(This article is translated by software translator for reference only.)