China’s Taxman Denies Launching Nationwide Campaign to Go After Back Taxes

00:00

00:00/00:00

Listen to this article 1x

China’s tax law stipulates that companies usually can’t be ordered to pay taxes that are more than five years past due, an expert said.Photo: VCG

China’s state tax authority said it has not launched a nationwide campaign to investigate companies for unpaid taxes, after several firms reported that they had been ordered to pay taxes owed from as far back as 30 years ago.

The State Taxation Administration (STA) acknowledged some local authorities had issued notices demanding specific companies pay back taxes, but said these were routine measures “in accordance with law and regulations,” according to a statement published Tuesday.

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Download our app to receive breaking news alerts and read the news on the go.

Get our weekly free Must-Read newsletter.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

China's State Taxation Administration (STA) clarified it has not initiated a nationwide tax investigation campaign despite some local authorities asking specific companies to pay back taxes as part of routine measures.
Notable companies like Shanghai-listed V V Food & Beverage Co. Ltd. and Ningbo Bohui Petrochemical Technology Co. Ltd. have been significantly impacted by back tax demands, leading to operational and financial strain.
China's tax law limits tax recovery to five years unless there is evasion or fraud; analysts believe local fiscal distress might be driving the recent tax collection efforts.

AI generated, for reference only

Who’s Who

V V Food & Beverage Co. Ltd.: V V Food & Beverage Co. Ltd., a Shanghai-listed firm, was notified by a local STA branch in Central China’s Hubei province that it owed 85 million yuan ($11.7 million) in consumption and other taxes dating from 1994 to 2009. This unexpected demand for back taxes was disclosed in an exchange filing published on Thursday.

Ningbo Bohui Petrochemical Technology Co. Ltd.: Ningbo Bohui Petrochemical Technology Co. Ltd. was ordered by local tax authorities in Ningbo, Zhejiang province, to pay additional consumption taxes on goods produced since July 2023 due to a rule change. The company estimated that paying these back taxes would cost 300 million yuan and result in a "significant loss" for 2023. Consequently, Bohui Petrochemical temporarily suspended certain operations due to operational capital difficulties.

Shanghai Shunho New Materials Technology Co. Ltd.: Shanghai Shunho New Materials Technology Co. Ltd. is one of the listed companies that have been ordered by local tax authorities to pay back taxes for activities or exemptions dating from 2017 to 2021.

Chinalin Securities Co. Ltd.: Chinalin Securities Co. Ltd. is one of several listed companies that have been ordered by local tax authorities to pay back taxes this year. These taxes pertain to activities or exemptions that date from 2017 to 2021.

AI generated, for reference only

What Happened When

2024-03：: Shenzhen-listed Ningbo Bohui Petrochemical Technology Co. Ltd. published an exchange filing stating that a local STA branch in Ningbo, Zhejiang province, had ordered it to pay additional consumption taxes on certain goods produced since July 2023 due to a rule change.

2024-06-18：: China’s State Taxation Administration (STA) published a statement acknowledging that some local authorities had issued notices demanding specific companies to pay back taxes, but denied launching a nationwide campaign to investigate companies for unpaid taxes.

2024-06-20：: Shanghai-listed V V Food & Beverage Co. Ltd. published an exchange filing stating that a local STA branch in Central China’s Hubei province informed its liquor-making unit that it owed 85 million yuan in consumption and other taxes from 1994 to 2009.