Developers cook books to avoid tax payments

(China Daily)
Updated: 2006-11-13 09:18

A number of real estate developers in China are failing to report actual profits in a bid to pay less tax, according to a Ministry of Finance investigation.

The ministry has investigated 39 real estate companies involved in 133 development projects around the country since 2005. It found out that most of these companies manipulated profit rates in their accounts, according to a China Central Television Station (CCTV) report on Friday.

"Some companies did it in a very serious way," Geng Hong, director of the ministry's monitoring and investigation department, told CCTV. The averaged profit rate of the 39 companies was 12.22 percent, but after investigators began examining their accounts the average rate was in fact 26.79 percent.

"One of the companies even had a profit rate of 57 percent, but it never reported the figure," said the official.

Despite the results of the investigation, it would be unfair to tar all real estate developers with the same brush, Geng noted.

She vowed that the Ministry of Finance was ready to get to the root of the problem.

"We will soon choose another pool of companies to investigate," she warned. "I believe the public is very concerned about it."

Companies caught cooking the books will have to rectify their accounts and pay the full tax amount. Serious offenders will be taken to court, according to the official.

(For more biz stories, please visit Industry Updates)

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