Real estate developers China Vanke Co and China Merchants Property announced Wednesday that they did not fail to pay land appreciation tax (LAT) that meets payment conditions, in resÂponse to a news report from China Central Television (CCTV) on Sunday that accused a group of developers of being behind on the payment of LAT.
Two other developers, Overseas Chinese Town and Gemdale Corp, also announced Tuesday that they did not refuse to pay LAT as alleged in the report.
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CCTV cited calculations by Li Jinsong, a Beijing-based lawyer and certified tax agent, in its report Sunday to show that major real estate companies are behind on payments of LAT amounting to over 3.8 trillion CNY from 2005 to 2012.
CCTV reported that Vanke owes 5.8 billion CNY in arrears while Merchants Property owes 4.4 billion CNY in arrears.
Li stands by his calculations despite the denials from the property companies.
Pan Shiyi, chairman of SOHO China, which was also named in the report, said on his Sina Weibo account Wednesday that the CCTV report contained mistakes and the network should be more careful.
Vanke said it had withheld the unpaid part of its LAT as provision, which was 4.435 billion CNY (730 million USD) as of December 31, 2012 as the 2012 annual financial report showed, according to an announcement released on Shenzhen Stock Exchange.
Vanke paid the LAT that meets the payment conditions, which was 1.413 billion CNY in 2012, the announcement said.
The LAT withheld by Merchants Property as provision because of not meeting settlement conditions stood at 4.206 billion CNY at the end of 2012, the company announced Wednesday also on Shenzhen bourse.
Property companies started to respond to the report on Monday, claiming that the CCTV report confused current tax liability with provisions in their accounts for future tax bills.
The State Administration of Taxation (SAT) also responded to the report, posting a statement on its website Tuesday saying that the method of calculation was incorrect because of misinterpretation and misreading of tax policies and collection methods.
Li dismissed the SAT's response as "empty words aimed at evading responsibilities".
"The SAT said my calculation and interpretation are wrong, but why did it not reveal the correct data to the public?" Li said on his blog Wednesday, noting the LAT did not give any solid evidence to prove that his calculation is wrong nor reveal the correct data of how much these listed companies should pay as the LAT.
It is the responsibility of the SAT to supervise the taxation of companies and reveal information to the public.
The SAT refused to make any comments in addition to the statement on its website Tuesday when contacted.
The dispute could be attributed to the loopholes in Chinese tax laws, Wang Surong, a professor from the University of International Business and Economics, said Wednesday, noting the loopholes can be used for tax avoidance or cause difficulties for tax departments in collecting taxes.
Wang explained that the current tax policies allow developers to delay the payment of LAT for a certain Âperiod of time if their property has not completely sold out.
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