[photopress:property_Beijing.jpg,full,alignright]China is tightening rules on calculating land-appreciation taxes imposed on developers. Stocks of property developers dropped by the daily limit in Shanghai and Shenzhen on concerns the changes will cut profits. Capital-gains taxes on developers’ properties will be calculated using the market value of their projects beginning next month. This according to the State Administration of Taxation.
Taxes were previously based on estimates of the project sites’ value and, as reported, were often artificially low.
Tian Shixin, Shanghai-based property stock analyst at BOC International, said, ‘The new changes clarified the collection process, and made it difficult to evade. They may reduce net profits by over 20% for some developers.’
China Vanke Co, the nation’s biggest property developer, fell by the 10% limit in Shenzhen.
Poly Real Estate Group, China’s largest state-owned developer, also fell by the daily limit, 10% in Shanghai.
Shares in Shenzhen Overseas Chinese Town Holdings, a builder of luxury villas also fell 10%.
Zhang Luan, an analyst at Haitong Securities in Shanghai said, ‘This is bad news for property developers which have up to now enjoyed profit margins as high as 50%.’
Source: The Business Times
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