Weke Ltd acquired land use rights for RMB100 million from the local government on 1 January 2000 and from this date, the land was idle. Weke Ltd incurred bank loan interest of RMB20 million relating to the acquisition of this land. Unfortunately, the company declared bankruptcy and the land use rights were sold at an auction on 31 December 2017 for RMB300 million excluding value added tax (VAT). The valuation of the land use rights on that date was RMB250 million. The following taxes were paid on auction:
VAT RMB15 million
Surtaxes on VAT RMB1·8 million
What is the amount of land appreciation tax, payable by Weke Ltd, on the auction of the land use rights?
Deductible for LAT = 100 + 1·8 million
Land appreciation value = 300 – 101·8 = 198·2 million
LAT = 198·2 x 50% – 101·8 x 15% = 83·83 million