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Real estate developers hit back at claims of unpaid tax

2013-11-26 08:12 Shanghai Daily Web Editor: qindexing

Chinese real estate developers owed at least 3.8 trillion yuan ($623 billion) in land appreciation tax between 2005 and 2012, according to a China Central Television report.

However, property companies hit back, with one saying the report was based on a "misunderstanding."

Another threatened to sue.

In a weekly consumer program on Sunday, CCTV said the firms should have paid more than 4.6 trillion yuan in land taxes, but authorities collected just 800 billion yuan.

The CCTV report cited Li Jinsong, a Beijing-based lawyer and also certified public accountant and tax agent. Li had tracked data released by the National Bureau of Statistics, Ministry of Finance and State Administration of Taxation.

The CCTV report did not say how many firms were alleged to have failed to pay taxes, but said they included 45 listed Chinese property developers, trading both domestically and overseas.

In China, developers must pay tax on the increase in the value of their land when they sell properties on the land or transfer the lease.

Developers which failed to pay the tax included China Vanke Co, SOHO China Ltd, Agile Property Holdings Ltd and Guangzhou R&F Properties Co, CCTV said.

Its report said the Beijing Huayuan Group owed around 540 million yuan, SOHO China 6.4 billion yuan, and China Vanke, the country's largest homebuilder by sales, 5.8 billion yuan.

Huayuan President Ren Zhiqiang threatened to sue CCTV.

"I only know the stupidity and ignorance of CCTV after seeing this report," said Ren on his widely followed microblog. "It wrongly assumed company's provision for the tax as an immediate obligation for payment of the tax. The LAT will be due after developers complete the project."

He added: "I'm studying how to publicly prosecute CCTV."

Li, the lawyer cited in the report, defended his claims on his microblog.

"I only know your stupidity and ignorance in the field of taxation after reading your posts," he shot back at Ren.

"Please consult your chief financial officer before posting."

China Vanke said yesterday that it obeyed all laws and regulations in its business operations and remained an honest taxpayer.

"The CCTV report was probably based on a misunderstanding," Vanke told netease.com. "It mistook 'provision' for 'obligation.'"

Gemdale Corp, which was said to owe 2.6 billion yuan, told the website it was "inappropriate" to use the word "owe."

It also questioned the accuracy of data used in the CCTV report.

Last night, more than 10 real estate developers named in the CCTV report, including Gemdale, Huayuan and COFCO Property, filed statements with the country's two stock exchanges saying that they did not owe tax.

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