The State Administration of Taxation said on its Website that it will begin to formally levy the value-added tax on land - 30-60 percent of developers' net gains from property deals - effective from February 1.

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The value-added tax on land was written into a national regulation in 1993, but was not widely collected due to a subsequent recession in the real estate sector.

The tax was resumed for the first time in Shenzhen at the end of last year.

At present, some regions in China are collecting the tax at a rate of one to two percent on sales of newly developed houses, while other areas have yet to start collection.

The new policy shows that the government clearly requires the levying of the tax, and will continue its macro-control over the real estate sector this year, analysts say.

The administration said the tax will be collected as soon as a single development project is finished or transferred.

"With the reintroduction of the value-added tax on land, the property sector will rank among the industries with the heaviest tax burdens in China, and falling profits will dampen future investment in the sector," the Oriental Morning Post quoted an unidentified developer in Shanghai as saying.

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