BEIJING says it will officially implement the country's controversial land appreciation tax (LAT) in the city within the next two months. Wang Jinghua, chief of the Beijing Tax Bureau's administration division, said the bureau had submitted to the city authorities a proposal on how to execute the tax system in the city. Once the proposal has been approved, Ms Wang said the city government would begin to charge tax payments on developers' capital gains on property transactions. 'It is expected to be formally implemented by the end of this year,' she said. The tax system was first announced by the central government in January 1994 and was aimed at putting the brakes on overheated luxury commercial and residential property developments in the country. But city governments have been slow to put it into effect amid strong opposition from overseas developers who would lose out. Ms Wang said it had been proposed that Beijing delay levying taxes on city property transactions conducted between January 1994 and January this year. The central government had considered backdating the tax to cover transactions made during the whole of last year. She said interest expenses would be considered as part of the development costs for the purpose of estimating the tax, but noted that interest rates from project financing could not exceed 10 per cent. Under the details of the nationwide LAT, the tax system is retroactive to January 1, 1994. Only developers whose transations were completed before January 1 last year are exempt from the tax. Tax rates of 30 to 60 per cent are levied on gains from property transactions. The tax provides for a five-year exemption period for transactions entered into before January last year. The exemption only applies to the first sale, however. Ms Wang said the tax system was aimed at curbing speculation and ensuring a healthy real estate market in the country. There would be no tax charges on transactions involving low-cost housing projects with a profit return not more than 20 per cent, she said. However, some analysts said the tax imposition indicated that developers' glory days in the mainland property market might be fading. They said developers would try different ways to find loopholes for avoiding tax charges. Because transactions could be conducted in ways other than by cash, Ms Wang conceded that developers might be able to avoid the taxes on gains from property transactions.