China property firms deny tax-shirking report

SHANGHAI (AFP) - Several Chinese property developers on Tuesday denied a state media report accusing them of failing to pay land taxes, saying it was a "misunderstanding".

State television reported in a weekly consumer programme Sunday that domestic property firms owed 3.8 trillion yuan (S$780 billion) in land taxes from 2005 to 2012, citing a lawyer's calculations.

China Central Television (CCTV) did not give a total for the number of firms included in that tally, but said it included 45 listed Chinese property developers, traded both domestically and overseas.

At least 14 companies have denied the allegations in statements filed through their listing exchanges or posted online.

Vanke, China's largest homebuilder by sales, said it had fulfilled its obligations for tax payments according to the law. "The financial statements of the company fairly reflected its financial conditions and operating results, and the company does not owe land taxes," Vanke chairman Wang Shi wrote on his microblog.

Another accused firm, Huayuan Property, also defended itself. "The way of speaking in the report about the company owing land taxes derived from a misunderstanding," Huayuan said.

"The report had a negative impact on the company and its investors." Huayuan closed down 0.37 per cent in Shanghai trading on Tuesday, while Vanke dropped 0.81 per cent on the Shenzhen Stock Exchange.

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.

A portion of the tax is typically pre-paid to the government while the rest is settled at a later date under certain conditions, meaning developers do not have immediate payment obligations, industry representatives said.

Huayuan chairman Ren Zhiqiang earlier threatened to sue CCTV, charging that the report showed the state broadcaster's "stupidity and ignorance". But the CCTV report sparked an outcry on Internet, with some users condemning real estate developers for greed and blaming them for unaffordable housing.

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

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