Developers accused of not paying VAT on land

The value added tax (VAT) on land that has not been paid by 29 publicly listed companies is estimated to be at least 64 billion yuan ($10 million) since 2005, a lawyer and certified tax professional told the Global Times Sunday.

The 29 developers include China Vanke, SOHO China and Huayuan Property.

Li Jinsong, a lawyer at Beijing-based Yitong Law Firm, told the Global Times that he started to notice the issue of unpaid VAT by listed property developers since 2005, and he made the calculations based on information in these companies' annual reports.

The figure usually comes under "land VAT payable" in the annual reports, indicating that the company recognizes the tax, Li said.

Despite the central government's decision to impose VAT on land in an effort to curb the rise in home prices, many developers have successfully delayed paying it for years because of poor implementation and vested interests among developers and local governments, Li noted.

"If the land VAT was levied as it was intended to be, the property developers would suffer tighter cash flow, forcing them to lower housing prices," he said.

Huayuan Property denied the allegation, saying that Li's understanding of the matter is incorrect and makes no sense, Beijing Youth Daily reported Sunday citing Zhang Nianping, a senior manager at Huayuan Property.

Li said that he also raised the issue with the Beijing Local Taxation Bureau, and the bureau promised to provide an official explanation of this complicated issue by the end of May.