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Ease of Doing Business in

China

China Download Profile (2200.4KB, pdf)
Region East Asia & Pacific
Income Category Upper middle income
Population 1,371,220,000
GNI Per Capita (US$) 7,820
City covered Shanghai, Beijing

190

1

DB 2017 Rank

1

100

DB 2017 DTF (% points)

  • local_library
  • group
Topics DB 2017 Rank DB 2016 Rank info_outline Change in Rank DB 2017 DTF (% points) info_outline DB 2016 DTF (% points) info_outline Change in DTF (% points) info_outline
Overall 78 80 up
2
64.28 62.86 down
1.42
Starting a Business 127 134 up
7
81.02 77.46 up
3.56
Dealing with Construction Permits 177 175 down
2
48.52 48.29 up
0.23
Getting Electricity 97 92 down
5
68.73 68.66 up
0.07
Registering Property 42 42
-
76.15 76.15
-
Getting Credit 62 78 up
16
60.00 50.00 up
10.00
Protecting Minority Investors 123 118 down
5
45.00 45.00
-
Paying Taxes 131 127 down
4
60.46 60.50 down
0.04
Trading across Borders 96 94 down
2
69.13 69.13
-
Enforcing Contracts 5 4 down
1
77.98 77.98
-
Resolving Insolvency 53 53
-
55.82 55.43 up
0.39

Positive= Doing Business reform making it easier to do business.Negative= Change making it more difficult to do business.

Viewing the data for

DB 2017 DTF (% points):

75.32

DB 2016 DTF (% points):

75.31

Change in DTF (% points):

up0.01

STANDARD PROPERTY TRANSFER
Property value CNY 2,453,862
City Shanghai
Indicator Shanghai East Asia & Pacific OECD high income
Procedures (number) info_outline 4 5.4 4.7
Time (days) info_outline 28 74.4 22.4
Cost (% of property value) info_outline 3.6 4.5 4.2
Quality of the land administration index (0-30) info_outline 19 13.4 22.7
  • Measure of efficiency
    No. Procedure Time to Complete Associated Costs
    1

    Parties enter into contract and pay taxes

    Agency: Real Estate Registry

    The property transfer procedure in Shanghai and most other cities starts from following steps:

    1. The parties negotiate and agree on a sale and purchase contract relating to the transfer of property. There is a standard sale and purchase contract formulated by government authorities but the parties can revise the contract by supplementary terms or supplementary agreement. However, the standard sale and purchase contract can be revised or supplemented with the supplementary terms or a supplementary agreement as appendix.

    2. The parties file the agreed contract online and the contract will be registered at the real estate registry via internet. Then the parties shall print out the contract at the designated printer available at the real estate registry office or licensed real estate brokers for further process.

    3. The officials in real estate registry will review the contract to make sure the price is generally in line with the market price, and the parties shall pay the taxes as mentioned above at the tax bureau window (the local tax authorities might have a window in most real estate registry offices in Shanghai) based on the reviewed purchase price.

    For online registration of contract : Measures on the Online Registration of Shanghai Municipality Existing Real Estate Broker Contract and Transfer Contract (http://www.fangdi.com.cn/News/ZCFG/200694164606.htm)


    Taxes to be paid by the seller and buyer while transfering a property.


    A. Tax to be paid by the buyer:

    i. deed tax: 3% of property value;

    ii. stamp duty: 0.05% of the property value.


    B. Tax to be paid by the seller:

    i. Value added tax: 11% of the difference between the purchase price and the sale price (not counted in cost calculations);

    ii. stamp duty: 0.05% of the property value;

    Additional business tax to be paid by seller:

    iii. educational surtax, to be 3% of the levied business tax (not counted in cost calculations);

    iv. local education surcharge: 2% of the levied business tax (not counted in cost calculations);

    v. land appreciation tax: 30% to 60% (as the case may be) of the added-value of the land, [or 3% of property value subject to the tax office's instruction in practice] (not counted in cost calculations);

    vi. urban maintenance and construction tax to be 1% to 7% of the levied business tax (not counted in cost calculations)

    vii. construction and installation business tax: 3% on the transfer pricate (not counted in cost calculations);

    viii. river maintanance fee: 1% of the levied business tax (not counted in cost calculations).

    ix. enterprise income tax: 25% of the profit from the selling property (which may be levied on the financial year end);


    The legislation for the major taxes to be paid by the seller and buyer can be found here:

    1. For Land Appreciation tax : Interim Regulations of the People's Republic of China on Land Appreciation Tax (http://www.mlr.gov.cn/zwgk/flfg/tdglflfg/200601/t20060119_642173.htm);

    2. For business tax : Interim Regulations of the People's Republic of China on Business Tax (http://www.gov.cn/zwgk/2008-11/14/content_1149510.htm);

    3. For Urban Maintenance Construction Tax : Interim Regulations of the People's Republic of China on Urban Maintenance Construction Tax (http://www.gov.cn/banshi/2005-08/19/content_24817.htm)

    4. For educational surtax : Interim Provisions on Collecting the Educational Surtax (http://www.gov.cn/gongbao/content/2011/content_1860811.htm)


    In accordance with the Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Transfers by Taxpayers (effective from 1 May 2016) the Business tax (5%) was replaced with the Value added tax (5% for property in business areas and 11% for property in rural areas).

    1 day Deed tax: 3% of property value to be paid by the buyer Stamp duty: 0.05% of property value to be paid by buyer and seller separately (total 0.1%)
    2

    Parties file the application at the Real Estate Registry

    Agency: Real Estate Registry

    Private ownership of land is not permitted in China; all land is subject to either State ownership or collective ownership. However, a private party is entitled to obtain the right to use the land. Regarding the State-owned land, there are two types of land use rights, the “granted land use right” and the “allocated land use right”. The difference is that the granted land use right is limited in time against payment, whereas the allocated land use right is usually given for free with no time limit, but for specific purposes only. A private party also may transfer to another private party the granted land use right. The allocated land use right cannot be commercially transferable before being converted into granted land use right. In this case, the land is used for commercial purposes. Usually land for commercial use is owned by the State, and the relevant land use right is the State-owned land use right. As to the term of the land use right in this case the buyer, who will use the land for commercial purposes, will only get 40 years as the initial term (as maximum unless it extends the granted land use rights at the end of the 40 year period by paying to the State the additional land price) minus the period from the granting date from the State to the date of the transfer to ABC. If the land is zoned for industrial use or warehousing use rather than for commercial use, the maximum land tenure should be 50 years.

    There is a standard form sale and purchase agreement formulated by government authorities and is required to be used in practice. The contents of the standard form agreement may be revised or supplemented by way of a supplemental agreement attached to the standard form agreement as appendix. The sale and purchase agreement needs to be printed at designated printers. Such printers are only available at licensed real estate brokers and the property registry offices. Property Ownership Certificate and Land Use Right Certificate are combined into one certificate in Shanghai, which is called "Real Estate Title Certificate".
    The documentation shall include:
    The seller and the buyer should submit one original real estate sales and purchase contract (duly signed) and a writing representation of the seller and buyer regarding the title transfer. There is no standard form of the contract (except for newly constructed commercial residential properties) nor is the participation of a lawyer/notary required.

    The seller should submit the below documents:
    (i) The original copy of the Property Ownership Certificate and Land Use Right Certificate "Real Estate Title Certificate" (already in possession of the seller); (ii) The original copy of the Business License or Organization Code Certificate; (iii) The original copy of the Board resolution approving the sales of the real estate;
    (iv) District Branch-dedicated Form for proof of legal representative’s authority, and photocopy of the identification card (or passport) of the legal representative; and
    (v) Photocopy of the identification card of the individual authorized to handle the actual Procedures, and the original copy of Power of Attorney.

    The buyer should submit the below documents: (i) Real Estate Ownership Registration Form;
    (ii) The original copy of the Business License or Organization Code Certificate; (iii) The original copy of the Board resolution approving the purchase of the real estate;
    (iv) District Branch-dedicated Form for proof of legal representative’s authority, and photocopy of the identification card (or passport) of the legal representative; And
    (v) Photocopy of the identification card of the individual authorized to handle the actual Procedures, and the original copy of Power of Attorney.

    26 calendar days (simultaneous with procedure 3)
    no cost
    * 3

    Parties pay registration fee

    Agency: Real Estate Registry

    The registration fee is paid at a separate window from that where one picks up the new title certificate. The Ministry of Finance and State Development and Reform Commission issued a notice, effective from May 1st 2008, to standardize the registration fees for real estate property. The registration fee is set at CNY 80 for one piece of residential housing and CNY 550 for one unit of non-residential building.


    The registration fee is decided by piece, not value of the property. The transaction handling fee of 0.5% of the transaction price shall by paid by the buyer, together with registration fees, according to No.hfdj[1996]744 Notice from Shanghai Building and Land Administration Bureau dated Sept 17,1996. The handling fee is mandatory and is made at the same time when the registration fee is paid. The payment is received by the Real Estate Registry.

    1 day (simultaneous with procedure 2) CNY 550 + transaction handling fee of 0.5% of sales price
    4

    Parties obtain new title certificate

    Agency: Real Estate Registry

    After paying the registration fee, along with the receipt, the buyer obtains the new Real Estate Title Certificate. In Shanghai the former Property Ownership Certificate and the Land Use Right Certificate have been combined into one certificate, the Real Estate Title Certificate. The title transfer Procedure will be complete upon the issuance of the new Real Estate Title Certificate.

    1 day no cost

    * Takes place simultaneously with previous procedure.

  • Measure of quality
    Answer Score
    Quality of the land administration index (0-30) 19.0
    Reliability of infrastructure index (0-8) 4.0
    What is the institution in charge of immovable property registration? Shanghai Real Estate Trade Center
    In what format are the majority of title or deed records kept in the largest business city—in a paper format or in a computerized format (scanned or fully digital)? Computer/Scanned 1.0
    Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions and the like)? Yes 1.0
    In what format are the majority of maps of land plots kept in the largest business city—in a paper format or in a computerized format (scanned or fully digital)? Computer/Scanned 1.0
    Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information system)? Yes 1.0
    Is the information recorded by the immovable property registration agency and the cadastral or mapping agency kept in a single database, in different but linked databases or in separate databases? Separate databases 0.0
    Do the immovable property registration agency and cadastral or mapping agency use the same identification number for properties? No 0.0
    Transparency of information index (0–6) 3.5
    Who is able to obtain information on land ownership at the agency in charge of immovable property registration in the largest business city? Only intermediaries and interested parties 0.0
    Is the list of documents that are required to complete any type of property transaction made publicly available–and if so, how? Yes, online 0.5
    Link for online access: http://www.fangdi.com.cn/linkimages/linkfiles/zhinan/fangdichanzhuanyi2.htm
    Is the applicable fee schedule for any property transaction at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how? Yes, online 0.5
    Link for online access: http://www.fangdi.com.cn/linkimages/linkfiles/zhinan/fangdichanzhuanyi2.htm
    Does the agency in charge of immovable property registration commit to delivering a legally binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Yes, online 0.5
    Link for online access: http://www.shfg.gov.cn/jydj/djzn/ywgz/329463.html
    Is there a specific and separate mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property registration? Yes 1.0
    Are there publicly available official statistics tracking the number of transactions at the immovable property registration agency? Yes 0.5
    Number of property transfers in the largest business city in 2015: Official site:http://www.fangdi.com.cn/MarketAnalysis.htm From other side...
    Who is able to consult maps of land plots in the largest business city? Only intermediaries and interested parties 0.0
    Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, on public boards 0.5
    Link for online access:
    Does the cadastral or mapping agency commit to delivering an updated map within a specific time frame—and if so, how does it communicate the service standard? No 0.0
    Link for online access:
    Is there a specific and separate mechanism for filing complaints about a problem that occurred at the cadastral or mapping agency? No 0.0
    Geographic coverage index (0–8) 4.0
    Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0
    Are all privately held land plots in the largest business city formally registered at the immovable property registry? Yes 2.0
    Are all privately held land plots in the economy mapped? No 0.0
    Are all privately held land plots in the largest business city mapped? Yes 2.0
    Land dispute resolution index (0–8) 7.5
    Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third parties? Yes 1.5
    Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5
    Is there a specific compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Yes 0.5
    Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)? Yes 0.5
    If yes, who is responsible for checking the legality of the documents? Registrar.
    Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5
    If yes, who is responsible for verifying the identity of the parties? Registrar; Notary.
    Is there a national database to verify the accuracy of identity documents? Yes 1.0
    For a standard land dispute between two local businesses over tenure rights of a property worth 50 times gross national income (GNI) per capita and located in the largest business city, what court would be in charge of the case in the first instance? District level court
    How long does it take on average to obtain a decision from the first-instance court for such a case (without appeal)? Less than a year 3.0
    Are there any statistics on the number of land disputes in the first instance? No 0.0
    Number of land disputes in the largest business city in 2015:
    Equal access to property rights index (-2–0) 0.0
    Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0
    Do married men and married women have equal ownership rights to property? Yes 0.0