01The definition of the farmland occupation tax and its tax law basis

The farmland occupation tax is a behavioral tax levied on units and individuals who occupy farmland to build buildings, structures or engage in non-agricultural construction, based on the actual area of farmland they occupy.

Its main tax law basis is the "Law of the People's Republic of China on the Occupation of Cultivated Land", which came into effect on September 1, 2019. At the same time, the "Interim Regulations of the People's Republic of China on the Occupation of Cultivated Land Tax" promulgated by The State Council on December 1, 2007 was abolished.

02The scope of collection, taxpayers and collection circumstances of the farmland occupation tax

Scope of collection:

The scope of taxation for the farmland occupation tax includes land used for growing crops, as well as other agricultural land such as garden plots, forest land, grassland, farmland water conservancy land, aquaculture water surfaces, fishery water areas and tidal flats.

Taxpayer:

Units and individuals who occupy cultivated land within the territory of the People's Republic of China to build buildings, structures or engage in non-agricultural construction are taxpayers of the cultivated land occupation tax. Specifically including:

Enterprises, institutions and individuals who build houses on cultivated land

All kinds of entities that occupy cultivated land for non-agricultural construction

Taxpayers who have been approved to occupy cultivated land upon application

The actual occupiers of cultivated land without approval

Examples of situations where the farmland occupation tax needs to be paid:

-A real estate development enterprise is developing a residential community project on cultivated land in the suburbs of Guangzhou City

-A manufacturing enterprise is occupying cultivated land in Foshan City to build a new factory

-A certain logistics company has occupied cultivated land in Dongguan City to build warehousing facilities

-A certain enterprise has occupied cultivated land in Zhuhai City to build an office building

-Individuals occupy cultivated land in rural areas to build self-occupied houses

-A certain company has occupied cultivated land in Shenzhen to build a commercial complex

-Government infrastructure projects occupy cultivated land to build roads, Bridges, etc

03The main tax rates of the farmland occupation tax

The tax on the occupation of cultivated land adopts a regional differential fixed tax rate. According to the per capita cultivated land area and economic development level of different regions, differentiated tax rate standards are implemented. The specific standards are as follows:

Note: The specific applicable tax rates for each region shall be proposed by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government within the prescribed tax rate range, and submitted to the standing committees of the people's congresses at the same level for decision, and filed with the Standing Committee of the National People's Congress and The State Council.

04Preferential policies for farmland occupation tax

According to the "Farmland Occupation Tax Law of the People's Republic of China", the main tax reduction and exemption benefits include:

Exemption circumstances:

1.Military facilities occupy cultivated land

2.Schools, kindergartens, social welfare institutions and medical institutions occupy cultivated land

3.The dependents of rural martyrs, the dependents of military personnel who died on duty, disabled military personnel, and rural residents who meet the conditions for rural minimum living security may build self-used residences within the prescribed land use standards and occupy cultivated land

4.For rural residents who have been approved for relocation, the portion of cultivated land occupied by newly built self-used residences does not exceed the area of the original homestead

5.Farmland water conservancy facilities occupy cultivated land

Circumstances for tax reduction：

For railway lines, highway lines, airport runways, aprons, ports, waterways and water conservancy projects that occupy cultivated land, the tax rate shall be reduced to 2 yuan per square meter

For rural residents who occupy cultivated land within the prescribed land use standards to build new self-used residences, the local applicable tax rate shall be halved

For rural residents who have been approved for relocation, the portion of cultivated land occupied by newly built self-used residences that exceeds the original homestead area shall be taxed at half the local applicable tax rate

05The proportion of the farmland occupation tax in all tax revenue in China and its significant position in China's fiscal revenue

The farmland occupation tax is an important tax type in China's tax system and belongs to local taxes. All its income belongs to the local government and it is one of the important sources of local fiscal revenue.

According to the annual fiscal revenue and expenditure data released by the Ministry of Finance of the People's Republic of China, the tax revenue from the occupation of cultivated land has the following characteristics:

1.It accounts for a certain proportion of local tax revenue, especially in regions with rapid economic development and strong demand for construction land

2.It plays an important role in regulating the allocation of land resources and curbs the blind occupation of cultivated land through the tax lever

3.It has provided local governments with a dedicated source of funds for the protection and development of cultivated land

4.It plays an important role in promoting the conservation and intensive use of land and protecting cultivated land resources

5.Although the tax on the occupation of cultivated land accounts for a small proportion of the total national tax revenue, it holds an irreplaceable and significant position in safeguarding national food security, maintaining ecological balance, and promoting sustainable development.

06Awareness of paying taxes in accordance with the law

The farmland occupation tax, as an important tax tool for the state to protect farmland resources and regulate the allocation of land resources, has very strict collection and management policies. Tax authorities ensure the timely and full collection of taxes through measures such as information sharing with natural resources departments, strengthening project approval and supervision, and intensifying tax inspection efforts.

As taxpayers and tax-related professional service institutions, it is essential to deeply understand that paying the farmland occupation tax in accordance with the law is a legal obligation that every unit and individual should fulfill. We must firmly establish the awareness of protecting cultivated land and conserving land use, accurately understand and master the laws, regulations and policies on cultivated land occupation tax, fully consider tax factors in the early stage of project planning and construction, and fulfill the obligation of tax declaration in accordance with the law. Guangzhou Exclusive Easy Finance and Taxation Company reminds you: Respecting tax laws and paying taxes in accordance with the law is not only a basic requirement of the law, but also a manifestation of corporate social responsibility. It helps promote the rational use of land resources, ensure national food security, and achieve sustainable economic and social development.