The Tax Reform Of China’s Real Estate Investment Trusts

Real estate investment trusts (REITs) are universally recognized by the internationalcommunity as one of the most effective real estate investing and financing tools. America isthe forefront of developing real estate investment trusts, which has a very close relationshipwith its every tax reform. China’s real estate investment trusts started from2002, intensivelyissuing in year of2010and the first half of2011. Currently, on November28,2012, theSichuan Trust released a trust program----the first phase of assembled funds trust plan ofequity investment of Fuxing Shanglvwen Fund, which has drawn widespread attentionbecause its expected return rate was over20%. However, under the current tax system, theREITs in China are facing many problems----heavy tax burden, double taxation, thenon-adaptability of traditional taxable elements, etc. So it is particularly important toestablish a tax system which can encourage the development of real estate investment trusts.America’s taxation concepts such as "repaired trust conduit theory","not taxable of formaltransfer","virtual taxation","conditional tax preferentials" well solved the trust double taxdilemma between trust companies and investors on trust benefits. They also relieve the taxburden of relevant parties, providing excellent tax law environment for the development ofREITs. Absorbing the REITs’ tax system of America, China should combine with the reality ofthe development mode and stage of our REITs’, refer to the existing tax regulations ofsecurities investment funds. In conclusion, we should make regulations avoiding doubletaxation in separate phases on different taxes such as business tax, income tax, stamp tax,deed tax, real estate tax, land value increment tax and so on.The thesis is divided into four parts:The first part is the introduction of REITs, analysis of the conceptual and legalcharacteristics of its origins and development, detailed combing the course of thedevelopment of the U.S. tax code to promote REITs four typical development model; then acombination of text and tables, analysis of their respectivepors and cons; final analysis of theneed to address the plight of REITs tax law.The second part elaborates trust the system and trust the conduit theory as well as trustentity theory, were introduced in Britain, the United States Trust Tax, especially the UnitedStates,"Modified conduit theory" and REITs for preferential taxation of various conditions; then analysis the following trust conduit theory of taxation to comply with the tax lawprinciples of taxation in real terms.The third part analyzes the status quo of China’s REITs taxable, and pointed out that theoverall tax burden is too heavy and the issue of double taxation; the result because the maintax qualification controversial and economic interests vested unclear traditional non-taxableelements adapt problems.The fourth part of the establishment and improvement of China’s real REITs tax regimerecommendations should be based on different aspects of different types of taxes to be clearlydefined first, according to the law, the law does not taxable; In order to avoid double taxationlead to an overall tax burden is too heavy and unfair.