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UPDATE 2-China's tax bureau says misunderstanding caused property developer-CCTV tussle
November 26, 2013 / 5:20 AM / 4 years ago

UPDATE 2-China's tax bureau says misunderstanding caused property developer-CCTV tussle

* CCTV had reported billions were owed in unpaid land taxes

* Hua Yuan president says considers legal action

* Bloggers critical toward CCTV reports

By Anne Marie Roantree and Kazunori Takada

HONG KONG/SHANGHAI, Nov 26 (Reuters) - China’s state tax bureau said on Tuesday a legal misunderstanding was behind the tussle between property developers and China Central Television (CCTV) after the state broadcaster reported that the firms owe massive sums in unpaid land taxes.

State Administration of Taxation did not directly name CCTV but said “estimates” of huge amounts of unpaid land appreciation taxes were not accurate.

“This is a misunderstanding and misreading of tax policies and the way taxes are levied. China has in recent years gradually stepped up the levy of land appreciation taxes,” it said in a statement on its official Weibo blog.

Listed property developers, including China Vanke and Gemdale Corp, all named in a CCTV report that aired on Sunday, denied claims they were among firms that avoided paying as much as 3.8 trillion yuan ($624 billion) in taxes due.

Property firms said the report 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 Company Ltd’s Ren Zhiqiang, said in a posting on an Internet microblogging site that he was 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 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.

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.

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.

Our Standards:The Thomson Reuters Trust Principles.
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