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POLITICAL ECONOMY
China state TV targets property firms over unpaid taxes
by Staff Writers
Shanghai (AFP) Nov 25, 2013


Chinese property developers owe 3.8 trillion yuan ($623 billion) in taxes, the state broadcaster said, firing a shot across the bows of real estate firms amid anger over high housing prices.

In a weekly consumer programme, China Central Television (CCTV) said property firms should have paid more than 4.6 trillion yuan in land taxes from 2005 to 2012, but authorities collected only 800 billion yuan.

The report, aired Sunday, cited lawyer Li Jinsong as the source. Li, of the Beijing Yitong Law Firm, has previously raised similar allegations but has never before been given such a high-profile platform in China's state-run media.

In recent months media condemnations of companies in China -- including several multinationals -- have accompanied official action against them.

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.

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

Chinese Internet users condemned real estate companies for greed, blaming them for unaffordable housing, while developers said Li's methodology was flawed.

High property prices are a major source of discontent among citizens, and authorities have sought to control their rise while at the same time pledging to provide low-cost housing.

Chinese home prices jumped 10.69 percent year-on-year to 10,685 yuan per square metre in October, according to an independent survey by the China Index Academy.

"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, a Chinese equivalent to Twitter.

But 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," said Ren Zhiqiang, the chairman of Huayuan Property, on his widely-followed microblog.

"I'm studying how to publicly prosecute CCTV," he added.

Li, the lawyer, defended his claims on his own microblog.

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

"Please consult your chief financial officer before posting."

Li could not immediately be reached for comment by AFP.

The report said commercial property developer SOHO China owed 6.4 billion yuan of land taxes, while China Vanke, the country's largest homebuilder by sales, owed 5.8 billion yuan.

Neither company immediately commented on the allegations.

Huayuan closed up 1.89 percent in Shanghai but Vanke fell 1.03 percent in Shenzhen, China's other stock exchange.

In Hong Kong, Agile -- which the report alleged owed 8.3 billion yuan, and which also did not comment -- dropped 2.57 percent and SOHO China slid 0.43 percent.

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

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