Chinese Property Firms Refute CCTV Report on $624bn in Unpaid Taxes
By m rochan | November 26, 2013 7:42 PM EST
Chinese property firms have rebuffed allegations that they owe the government billions of dollars in outstanding land taxes.
Publicly traded firms such as China Vanke, the nation's largest property developer by sales, Gemdale and BBMG, named in a CCTV report that aired on 24 November, rejected claims they are among several firms that avoided paying close to 3.8tn yuan (£386bn ,€461bn, $624bn) in land taxes.
The CCTV broadcast quoted calculations by a Beijing-based lawyer, Li Jinsong, as showing that 45 listed real estate firms were among developers that ought to have paid in excess of 4.6tr yuan in land taxes between 2005 and 2012.
According to Li's calculations, the government collected 800bn yuan in taxes during the period.
In their response, Chinese developers said the CCTV report failed to differentiate between stipulations in their accounts for future tax bills and actual tax payments already made.
Other developers named in the report include Beijing North Star, Agile Property Holdings and Hua Yuan Property.
Hua Yuan's president Ren Zhiqiang blogged his firm could take the broadcaster to court over the allegations.
Pursued by Reuters, CCTV officials did not respond to a request for comment.
Beijing May Get Tough
Wee Liat Lee, analyst at BNP Paribas, said the CCTV report could be a precursor to rigorous enforcement of tax collection.
"This could be the prelude to the central government's tightening of land appreciation tax collection," he said.
The CCTV report comes against a backdrop of rising property prices. Home prices in the mainland's cities have risen despite government intervention aimed at cooling the property markets.
Data from China's National Bureau of Statistics shows home prices increased by 21.4% on an annual basis in Shanghai in October, the highest among 70 major cities.
Home prices rose 21.2% in Beijing, 20.7% in Guangzhou and 20.6% in Shenzhen last month.
Disparate Property Markets
China has deferred plans to relax controls on the sale of property built by farmers or village collectives on rural land, a move that will impact home buyers looking to escape escalating real estate prices in the mainland's top cities.
China's urban dwellers are not allowed to purchase rural homes with limited property rights, and such purchases are not legally guaranteed.
However, rising prices have forced several people to invest in low-cost rural homes.
All land in China is still owned by the government.
Land in urban China can be freely traded.
Land in rural China is owned by collectives - villages and townships. Farmers only have the right to use it and both farmers and collectives are barred from selling rural land.
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