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Chinese Super League

Chinese Super League clubs hit with double incentive to cough up luxury levy to the CFA but loans provide loophole

Regulation announced ahead of long anticipated confirmation of Cedric Bakambu moving to Beijing Guoan

PUBLISHED : Tuesday, 13 February, 2018, 12:18pm
UPDATED : Tuesday, 13 February, 2018, 12:23pm

While the Cedric Bakambu transfer to Beijing Guoan is still no nearer a conclusion, the Chinese Football Association has ruled on the potential luxury tax implications for transfers to Chinese Super League clubs.

Clubs who refuse to pay the transfer tax will be liable for point deductions based on the fee for the player and they will also be unable to register the player with the CFA, rendering them ineligible for official competition in China and under the AFC.

That double punishment leaves clubs with little option but to accept the luxury levy and pay up.

The announcement comes ahead of the expected confirmation of Congo striker Bakambu’s transfer from Spanish Primera Liga side Villareal to the Chinese capital.

Bakambu trained with Guoan at their pre-season camp in Portugal and even scored for the club at the Atlantic Cup but has not yet been officially announced as a new signing or registered with the CFA.

Possible points deductions range from one to 15 points depending on the transfer fee involved, but the CFA have announced that transfers where players buy themselves out of their contracts – as Bakambu did at Villareal – and deals paid for by third-parties are also subject to the regulation.

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Bakambu’s €40 million (US$49.1 million) release clause would mean that Beijing Guoan would be liable for a 10-point deduction, the second-most severe of the five tiers.

Similarly, loan deals that become permanent transfers will be eligible for tax on both the initial loan fee and the transfer amount.

That means were Tianjin Quanjian’s Anthony Modeste to make his move from Cologne permanent then the CSL side would have to pay tax on a reported 41 million (US$50.4 million)– two annual loan payments of 6 million and a 29 transfer fee.

Provided the loan signing does not move to the Chinese club permanently there are no transfer tax implications, providing a loophole for sides to bring in foreign players.

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The transfer tax was introduced in the transfer window ahead of the 2017 season in an attempt to curb excessive spending by Chinese clubs. Under the scheme, clubs have to pay a contribution to a central grass roots fund, matching any fee over RMB45 million (US$7.1 million) for foreign players and RMB20 million for Chinese players.

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Chinese Super League clubs have until the end of the current transfer window at the end of February to register their squads for 2018 with the CFA ahead of the season kicking off in early March.