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HONG KONG/SHANGHAI: Chinese property developers have dismissed claims by China Central Television (CCTV) that they owe massive sums in unpaid land taxes, pitting some of China’s most powerful businessmen against the influential state-owned broadcaster.
Listed companies including Gemdale Corp, BBMG Corp and Beijing North Star Co Ltd, all named in a CCTV report that aired on Sunday, denied claims they are among firms that avoided paying as much as 3.8 trillion yuan (RM2 trillion) in taxes due.
The property developers said the report by CCTV was based on confusion between provisions in their accounts for future tax bills and actual tax payments already made.
The president of one of the companies, Hua Yuan Property Co Ltd’s Ren Zhiqiang, said in a posting on an Internet microblogging site that he is considering whether to pursue legal action against the broadcaster.
Officials at CCTV did not respond to a request for comment when contacted by Reuters.
CCTV has attracted attention internationally this year, with reports that previously targeted global companies operating in China, including Apple Inc and Samsung Electronics Co Ltd over quality and service issues, and Starbucks Corp over pricing.
The row over the broadcast on developers comes as home prices in large Chinese cities have set records, despite a four-year long government campaign to cool the property market, raising concerns over a potential price bubble.
In the broadcast that aired on Sunday, CCTV cited calculations by a Beijing-based lawyer, Li Jinsong, as showing 45 listed property firms were among developers that should have paid more than 4.6 trillion yuan in land taxes from 2005 to 2012. According to the calculations, authorities collected 800 billion yuan for the period.
Other companies named in the report include China Vanke Co Ltd, the country’s largest property developer by sales, and Agile Property Holdings.
Fitch Ratings said in a report on Monday that land taxes payable in future aren’t a major concern for the Chinese property developers on which it issues ratings.
“The payables arise from the timing gap between when property is delivered and taxes are paid, and the practices of developers in this regard are normal and consistent in China,” the ratings agency said.
Wee Liat Lee, an analyst at BNP Paribas, said the CCTV report could be a signal that authorities may be gearing up to toughen enforcement of tax collection.
“This could be the prelude to the central government’s tightening of land appreciation tax collection,” he said.
An overwhelming number of bloggers on Sina Weibo were also critical of the CCTV report on property developers.
“CCTV publicly denounced the property companies owing land appreciation tax of 380 billion yuan without even making clear the facts themselves, which reflected not only ignorance, but also arrogance and hostility,” wrote Gao Ping.
Some of CCTV’s programmes have been criticised by bloggers in China as being unfair or inaccurate. — Reuters
This article first appeared in The Edge Financial Daily, on November 27, 2013.
