Land and Property Policy News
- Developers expect little impact from tax rules
Date: 19-Jan-2007 Sources: (Shenzhen Daily)
CHINA Vanke Co. and two other listed property developers said Thursday that they expected little impact on their earnings from the enforcement of a land appreciation tax.
Vanke, the biggest listed developer, said the tax would have 'relatively little?effect and did not change its estimate that net profit rose between 50 and 65 percent last year. Vanke is expected to report 2006 earnings in March or April.
The national tax administration's announcement Wednesday was little different from previously announced policy, Vanke said, adding that it had already prepaid some of the tax and made provision for it in previous earnings statements.
Shenzhen Changcheng Investment Holding Co. and Oceanwide Construction Group Co. issued similar statements, also saying they had prepaid some tax and expected small or limited impact from it.
Property shares plunged Wednesday after the tax administration said it would levy the previously announced but poorly enforced tax from Feb. 1, applying it to 2006 earnings.
Vanke shares tumbled their 10 percent daily limit. However, many analysts said the announcement had merely triggered a round of profit taking by investors and that selling of property stocks should end soon. Vanke had soared 24 percent this month.
The tax announcement was the latest of a series of moves by the government since last year to cool the property market.
But the measures have been aimed largely at speculators. Major listed property developers have continued to see earnings rise, and have even benefited as some speculators have been forced out of the market.
Vanke and Shenzhen Changcheng said Thursday they were focusing on development of ordinary residential projects, rather than the high-end housing projects which have often seen big jumps in land prices.
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