Research On Legal Issues Of Taxation Of Public REITs In Infrastructure

Infrastructure construction is an important support for China’s economic development,and the 14 th Five-Year Plan has given a new role to infrastructure construction.(hereinafter referred to as "Notice"),marking the official launch of China’s REITs pilot,a new financing method was born at the right time.In January2022,the Ministry of Finance and the State Administration of Taxation issued the Notice on Taxation Policies for Real Estate Investment Trusts(REITs)Pilot in Infrastructure Sector(hereinafter referred to as "Notice No.3"),which clarified some of the taxation policies for the establishment phase of REITs.taxation policies during the establishment stage of REITs.However,on the whole,there are still outstanding problems in China’s REITs market,such as high tax costs and double taxation,which require further clarification and specification of the tax burden of the entire process of public REITs in infrastructure and targeted improvement to facilitate the construction and development of China’s REITs market.This paper adopts case studies and comparative studies to firstly,sort out the overview of infrastructure public REITs,including basic concepts,functions and development history.Secondly,under the current taxation system in China,the tax burden of infrastructure public REITs during their complete life cycle is analyzed in three stages: establishment,operation and exit,and the tax burden characteristics of different stages are analyzed according to different paths,such as the complex tax involved in the establishment stage is analyzed according to tax types,and the operation stage involves repeated taxation among different levels and is analyzed with the taxed object as the main body.Based on the analysis of tax liabilities,the tax legal problems in the establishment,operation and exit stages are summarized by combining the case study method: higher tax in the establishment stage,double taxation in the operation stage and tax risks in the exit stage are easily ignored.Finally,by drawing reference from the tax benefits in the mature REITs market in foreign countries,the paper proposes feasible suggestions on the tax legal problems of China’s infrastructure public REITs in light of China’s national conditions.This paper believes that the taxation of infrastructure public REITs should firstly follow the principles of substantive taxation and tax neutrality,and under the guidance of taxation principles,relevant tax incentives should be introduced for each stage.In the establishment stage,it is suggested that the high land value-added tax,value-added tax and deed tax should be reduced and exempted,so as to alleviate the concerns of the original equity holders and increase their enthusiasm to participate in REITs;in the operation stage,it is suggested that the experience of mature markets such as the United States,Japan and Singapore should be taken into account,and the "conduit theory" should be followed,so that only the REITs and the investors should be taxed at the level of the REITs and the investors.In the operation stage,it is recommended to follow the "conduit theory" and levy only one income tax at the level of REITs and investors to avoid double taxation;in the exit stage,on the one hand,the stamp duty involved in all stages of public REITs in infrastructure should be reduced and exempted,and on the other hand,the publicity and administration of stamp duty should be strengthened to reduce the tax risks brought by the easily neglected stamp duty.By implementing a package of tax incentives for the three stages of establishment,operation and exit,it helps China’s infrastructure public REITs get out of the tax dilemma,guarantees the steady construction of China’s REITs market,and helps China’s economic development of high quality.