China Denies Inheritance Tax Rumours

by Mary Swire, Tax-News.com, Hong Kong

23 November 2004

Media reports published late last week have suggested that China is considering levying an inheritance tax at a rate of 40%.

According to a report from the Xinhua news service, property sales in some areas of China have begun to rise sharply as a result of the rumours that the central government is about to impose an inheritance tax.

In addition, the report revealed that the housing supervision department in the state of Guandong has noted an increase in the number of people purchasing property in the name of their children in an attempt to circumvent any future estate tax.

Speculation that the government is soon to unveil a new inheritance tax has been rife in recent weeks, with many experts suggesting that the existence of a large and growing class of affluent Chinese justifies the need for such a levy.

However, others have suggested that it remains too early in China’s economic development for an inheritance tax, arguing the levy will be costly to collect and will act as a drag on the economy.

The tax authorities have denied any suggestion that inheritance tax legislation is being drafted.

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