Tue, Nov 26, 2013 - Page 15 News List

Chinese developers owe US$623bn in taxes: CCTV

DEFICIT?Property firms owed 4.6 trillion yuan in land taxes from 2005 to last year, but authorities collected only 800 billion yuan, China Central Television reported

AFP, SHANGHAI

A man takes a photograph with a mobile phone at a riverside promenade in Guangzhou, China, on Saturday. New home prices in China’s four major cities rose the most since January 2011, raising concerns of a bubble as home buyers were emboldened by a lack of new nationwide property curbs.

Photo: Bloomberg

Major Chinese property developers owe 3.8 trillion yuan (US$623 billion) in unpaid taxes, the state broadcaster said, raising a storm of controversy amid huge sensitivity over high housing prices.

In a weekly consumer program, China Central Television (CCTV) said property firms should have paid more than 4.6 trillion yuan in land taxes from 2005 to last year, but authorities collected only 800 billion yuan.

The report, aired on Sunday, cited lawyer Li Jinsong (李勁松) as the source.

Li, of the Beijing Yitong Law Firm, has previously raised the allegations, but has never before been given such a high-profile platform in China’s state-run media.

The CCTV report did not give a total for the number of firms alleged to have failed to pay taxes, but said they included 45 listed Chinese property developers, traded both domestically and overseas.

Li could not immediately be reached for comment by reporters.

Chinese Internet users condemned real-estate companies for greed and blamed them for unaffordable housing, while developers said the methodology was flawed.

“Property developers force up home prices to such high levels, it’s time for them to surrender some of their profits,” user Lili277 posted on a Weibo microblog.

However, the head of one of the accused firms threatened to sue CCTV.

“I only know the stupidity and ignorance of CCTV after seeing this report,” Huayuan Property chairman Ren Zhiqiang (任志強) wrote on his widely followed microblog.

“I’m studying how to publicly prosecute CCTV,” he added.

Stock investors took a mixed view.

Huayuan closed up 1.89 percent in Shanghai trading, while another developer, Vanke, fell 1 percent in Shenzhen, China’s other stock exchange.

In Hong Kong, Agile Property Holdings Ltd — which the report alleged owed 8.3 billion yuan — dropped 2.6 percent, but SOHO China edged up 0.14 percent.

CCTV has previously taken aim at other companies over consumer issues in China, including technology giant Apple Inc over its warranty polices and German auto firm Volkswagen AG over quality.

Earlier this year, the government investigated foreign companies over prices in the baby formula and pharmaceutical sectors amid a bribery probe into Britain’s GlaxoSmithKline.

However, the CCTV report was questioned by analysts from Credit Suisse Group AG and CIMB-GK Securities Research, who said it was either a miscalculation or did not take into account the timing of the tax payments.

Additional reporting by Bloomberg

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