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Chinese Real Estate Shenanigans – Bizarre Divorce & Remarry Scheme to Avoid Taxes Goes Trending

They divorced, wife-swapped, divorced, and remarried – all for tax evasion. Although Chinese media condemn the story, netizens applaud it.

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A bizarre report about two couples divorcing and ‘wife swapping’ in order to avoid paying taxes on their property transfer has become a popular news story of the day in China. While Chinese media denounce the tax-evasive real estate “shenanigans”, netizens have unexpectedly sided with the couples.

A story about two couples in Jinan, Shandong, who faked their divorce and did a wife-swap in order to evade taxes during a property transfer has become a top story on Netease, one of China’s leading online (mobile) news platforms.

The story started when couple A wanted to buy a property from couple B. They each ‘divorced’, after which the wife of couple A remarried with the husband of couple B. When ownership of their property was transferred, they divorced again, and couple A and couple B both remarried their original wives.

The comical divorce shenanigans were exposed when the case recently ended up in court. The Netease story about the couples was read 55,500 times within hours after its publication.

People in China have been divorcing to skip property taxes for years. In 2013, Chinese authorities implemented tougher taxes on home sales, as much as 20%. At the time, (international) media already reported about the following surge in divorces in cities such as Shanghai (Sweeney 2013).

Many Chinese invest their wealth in real estate – especially because property prices have been skyrocketing for years. Since divorce allows couples to split ownership of their property and then sell without having to pay those high taxes, there are those who opt for a ‘quickie’ – a no-fault, uncontested divorce. Once divorce and the division of real estate is complete, and the property has been sold, they can remarry.

In the Jinan case, the property was over 400 square meters big and worth 12 million RMB (US$ 1.9 million) when couple A wanted to buy it from couple B in the summer of 2015. Due to the size and prize, the Sina News reports, high taxes need to be paid to apply for the property’s transfer procedures.

In order to obtain the property rights in the smoothest and cheapest way possible, couple A came up with the idea to ‘swap wifes’ for the time being. Couple B divorced, attributing the property to the husband – who then married the wife of couple A. After that, husband B transferred the property to the name of his new bride, wife A, and then divorced her again only to let the two remarry their original spouses again.

The ‘divorce scheme’ to evade taxes, image published by Netease.

The deal was to transfer the first half of the money before the fake marriage, and then the other half when the ordeal was over. Eventually, however, their plan failed when husband B made a mistake in finalizing the paperwork before receiving the final 6 million. When wife A could not come up with the 6 million RMB, husband B took the case to court.

The court, however, was not sympathetic to the couples’ ingenious plans and revoked the transfer, and fined the couple 50,000 rmb (±$8000) each for their tax evasive ‘divorce and remarry’ construction.

Although the Netease news report, that was also (originally) published on Qilu Evening News (齐鲁晚报) and on Sina News, condemned the couples, saying that “marriage registration is no child’s play” and that “legal boundaries should not be crossed for one own’s immediate benefit”, commenting netizens unexpectedly applauded the story and sided with the creative couples.

“Is this illegal?”, a top commenter (8500+ likes) responded to the story: “This should not be called tax evasion, it should be called reasonable tax avoidance!”

Many commenters point out that since neither divorce nor remarrying is illegal, it is not the couples’ fault for making use of their legal rights – and that it is the Chinese property tax laws that are to blame.

Chinese authorities do not impose regular levies on homeowners just yet; individuals are only taxed when buying or selling property. Although China’s house property taxes, which are believed to tame the housing prices, will be pushed forward, it might take another three years before their implementation (Gopalan 2018).

“These couples are just as birds in the forest,” one Netease commenter writes: “They fly when the big tax comes.”

“What did they do wrong?”, many wonder.

By Manya Koetse and Miranda Barnes

References

Gopalan, Nisha. 2018. “Don’t Bet Your House on China’s Property Tax.” Bloomberg, March 8. https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-bet-your-house-on-china-s-property-tax-just-yet [11.4.18].

Sweeney, Pete. 2013. “Till taxes do us part: Chinese divorce to skip property tax.” Reuters, March 6. https://www.reuters.com/article/us-china-property-divorce/till-taxes-do-us-part-chinese-divorce-to-skip-property-tax-idUSBRE9250CY20130306 [11.4.18].

Spotted a mistake or want to add something? Please let us know in comments below or email us.

©2018 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

Miranda Barnes is a Chinese blogger and part-time translator with a strong interest in Chinese media and culture. Born in Shenyang, she used to work and live in Beijing and is now based in London. On www.abearandapig.com she shares news of her travels around Europe and Asia with her husband.

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1 Comment

1 Comment

  1. Saedul JS

    November 18, 2019 at 10:26 am

    Nice post! This is very informative! Great job! Keep on posting!

    Family Lawyer Of Saskatoon

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China and Covid19

Fangcang Forever: China’s Temporary Covid19 Makeshift Hospitals To Become Permanent

China’s temporary ‘Fangcang’ shelter hospitals are here to stay.

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A new term has been added to China’s pandemic lexicon today: Permanent Fangcang Hospital. Although China’s ‘Fangcang’ shelter hospitals are, by definition, temporary, these healthcare facilities to isolate and treat Covid patients are now becoming a permanent feature of China’s Zero-Covid approach.

Over the past few days, Chinese authorities have emphasized the need for China’s bigger cities to build or renovate existing makeshift Covid hospitals, and turn them into permanent sites.

So-called ‘Fangcang hospitals’ (方舱医院, square cabin hospitals) are large, temporary makeshift shelter hospitals to isolate and treat Covid-19 patients. Fangcang shelter hospitals were first established in China during the Wuhan outbreak as a countermeasure to stop the spread of the virus.

January 5 2022, a Fangcang or Isolation Point with over 1000 separate isolations rooms is constructed in Baqiao District of Xi’an (Image via Renmin Shijue).

They have since become an important part of China’s management of the pandemic and the country’s Zero-Covid policy as a place to isolate and treat people who have tested positive for Covid-19, both asymptomatic and mild-to-moderate symptomatic cases. In this way, the Fangcang hospitals alleviate the pressure on (designated) hospitals, so that they have more beds for patients with serious or severe symptoms.

On May 5th, Chinese state media reported about an important top leadership meeting regarding China’s Covid-19 situation. In this meeting, the Politburo Standing Committee stressed that China would “unswervingly adhere to the general Zero-Covid policy” and that victory over the virus would come with persistence. At the meeting, chaired by Xi Jinping, the seven-member Politburo Standing Committee also declared that China would fight against any words or acts that “distort, doubt, or deny” the country’s dynamic Zero-Covid policy.

Life inside one of Shanghai’s Fangcang, photo via UDN.com.

Following the meeting, there have been multiple official reports and statements that provide a peek into China’s ‘zero Covid’ future.

On May 13, China’s National Health Commission called on all provinces to build or renovate city-level Fangcang hospitals, and to make sure they are equipped with electricity, ventilation systems, medical appliances, toilets, and washing facilities (Weibo hashtag ##以地级市为单位建设或者改造方舱医院#).

On May 16, the term ‘Permanent Fangcang Hospital’ (Weibo hashtag #永久性方舱医院) became a trending topic on Weibo after Ma Xiaowei (马晓伟), Minister of China’s National Health Commission, introduced the term in Qiushi (求是), the leading official theoretical journal of the Chinese Communist Party.

The term is new and is somewhat contradictory as a concept, since ‘Fangcang hospitals’ are actually defined by their temporary nature.

Ma Xiaowei stressed the need for Chinese bigger cities to be ready for the next stage of China’s Covid control. This also includes the need for some central ‘Fangcang’ makeshift hospitals to become permanent ones.

In order to ‘normalize’ the control and monitoring that comes with living in Zero-Covid society, Chinese provincial capitals and bigger cities (more than ten million inhabitants) should do more to improve Covid testing capacities and procedures. Ma proposes that there should be nucleic acid sample collection points across the city within a 15-minute walking distance radius, and testing frequency should be increased to maximize efficient control and prevention.

Cities should be prepared to take in patients for isolation and/or treatment at designated hospitals, centralized isolation sites, and the permanent Fangcang hospitals. The recent Covid outbreak in Shanghai showed that local authorities were unprepared to deal with the outbreak, and sites that were used as Fangcang hospitals often lacked proper facilities, leading to chaotic scenes.

A Fangcang Isolation Center in Quanzhou, March 2022, via People’s Daily.

The hashtag “Permanent Fangcang Hospitals” received over 140 million views on Weibo on Monday.

One of the Weibo threads by state media reporting on the Permanent Fangcang hospitals and the publication by Ma Xiaowei received nearly 2000 comments, yet the comment section only displayed three comments praising the newly announced measures, leaving out the other 1987 comments.

Elsewhere on Weibo, people shared their views on the Permanent Fangcang Hospitals, and most were not very positive – most commenters shared their worries about China’s Covid situation about the stringent measures being a never-ending story.

“We’re normalizing nucleic acid test, we’re introducing permanent fangcang hospitals, [but] why isn’t the third Covid vaccination coming through?” one person wondered.

“If there was still a little bit of passion inside me, it was just killed by reading these words ‘Permanent Fangcang Hospital,'” another commenter writes, with one Weibo user adding: “I feel desperate hearing the words ‘Permanent Fangcang Hospital.'”

“Building permanent Fangcang? Why? Why don’t you use the resources you’re now spending on normalizing testing to create more hospital beds, more medical staff and more medications?”

Another commenter wrote: “China itself is one giant permanent Fangcang hospital.”

“The forever Fangcang are being built,” one Weibo user from Guangdong writes: “This will never end. We’ll be locked up like birds in a cage for our entire life.”

For more articles on the Covid-19 topics on Chinese social media, check here.

By Manya Koetse, with contributions by Miranda Barnes

Get the story behind the hashtag. Subscribe to What’s on Weibo here to receive our weekly newsletter and get access to our latest articles:

Featured image via user tongtong [nickname] Weibo.com.

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©2022 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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China and Covid19

‘Hard Isolation’ is Shanghai’s New Word of the Day

In line with a new ‘hard isolation’ measure, the entrances of some Shanghai residential buildings were fenced up.

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While some Shanghai households have already endured weeks of isolation, a new word was added to their epidemic vocabulary today: ‘hard isolation’ or ‘strong quarantine’ (yìng gélí 硬隔离)

The word popped up on Chinese social media on April 23rd after some Shanghai netizens posted photos of fences being set up around their community building to keep residents from walking out.

“New word: hard isolation. Shanghai is rotten to the core,” one commenter wrote.

The word soon turned into a hashtag page where people started commenting on the issue of fences being placed around residential buildings, voicing concerns on what a fence around buildings would mean for fire safety, especially after online rumors suggested that there had been a fire at one community in Pudong on Saturday night.

An official document regarding the ‘hard isolation’ measure was also shared online on Saturday. It is dated April 23, 2022, and its source is the Pudong New Area Office for Epidemic Control.

The document states that in line with the guidelines for the city’s epidemic prevention and control, the division between areas or zones that are in certain risk categories should be ‘optimized,’ with those in the high-risk category requiring a ‘hard isolation.’ Security guards should also be on duty 24 hours a day at the entrance of the buildings.

Earlier this month, Shanghai adopted “3-level control measures” after its initial phased lockdown. It means that local areas will be classified as “locked-down,” “controlled” or “precautionary,” based on their Covid19 risk.

“Could we also put fences around the homes of Shanghai leaders?”, one person suggested, while others posted images from the Walking Dead to mock the situation.

In the hope of Shanghai soon tackling the Covid situation, not everybody disagreed with the decision to fence some buildings or communities in the Pudong area: “I don’t disagree with it, as long as there is always someone there to open the fence in case of fire,” one person stated.

Although having a fence around their building is currently not a reality for most in Shanghai, the online photos of some communities seeing their buildings being fenced up is a reason to worry for some: “It’s been 40 days, and now they start hard isolation? This actually scares me. Before we know it, it’s June.”

One Weibo user asked: “Why is it possible to implement this hard isolation now? Was this created by the same persons who also implemented the rule to separate children from parents at isolation sites?”

“I truly can’t imagine why some people thought this is a good idea,” others wrote.

For more articles on the Covid-19 topics on Chinese social media, check here.

By Manya Koetse

Get the story behind the hashtag. Subscribe to What’s on Weibo here to receive our weekly newsletter and get access to our latest articles:

Spotted a mistake or want to add something? Please let us know in comments below or email us. First-time commenters, please be patient – we will have to manually approve your comment before it appears.

©2022 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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