Chinese property firms owe US$623b in taxes

SHANGHAI: Major Chinese property developers owe 3.8 trillion yuan (US$623 billion or RM2 trillion) in taxes, the state broadcaster said, raising a storm of controversy amid huge sensitivity 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 on Sunday, cited lawyer Li Jinsong as the source. Li, of the Beijing Yitong Law Firm, 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 AFP.

Chinese Internet users condemned real estate companies for greed, blaming 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, a Chinese equivalent to Twitter.

Forty-five listed Chinese property developers which traded both domestically and overseas are alleged to have failed to pay taxes.

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.

Stock investors took a mixed view. Huayuan was up 1.52% in Shanghai trading in the afternoon, while another developer, Vanke, fell 1.03% in Shenzhen, China’s other stock exchange.

In Hong Kong, Agile — which the report alleged owed 8.3 billion yuan — dropped 2.46% but Soho China edged up 0.14%.

CCTV had 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. — AFP


This article first appeared in The Edge Financial Daily, on November 26, 2013.