If significant tax violation conducted, information of discreditable enterprise and its legal person will be made public!

In 2014, the State Administration of Taxation (SAT) formulated the Measures for the Publication of Information on Significant Tax Violation Cases (for Trial Implementation), which was revised twice by the SAT in 2016 and 2018. On 31 December 2022, the SAT revised the Measures again and renamed them as the Administrative Measures for the Publication of Information on Subjects with Significant Tax Violations and Discredit[1], which has come into effect on 1 February 2022.

 

Highlights with focus:

 

• Subject of Discredit

1. Forges, falsifies, conceals or destroys books of account or bookkeeping vouchers without authorization, or overstates expenses or does not or understates income in the books of account, or refuses to file a return or makes a false tax return after being notified to do so by the taxation authorities, fails to pay or underpays tax payable in an amount of more than RMB 1 million, and the failure to pay or underpayment of tax payable in any one year accounts for more than 10% of the total amount of tax payable for each tax type in that year, or takes the aforesaid means, fails to pay or underpays the tax deducted or received by an amount of more than RMB 1 million.
2. Defaulting on the payment of tax due, adopting the means of transferring or concealing property, and obstructing the tax authorities in recovering the tax owed, and defaulting on the payment of tax in an amount of RMB 1 million or more.
3. Fraudulently obtaining state export tax refunds.
4. Refusal to pay tax by means of violence or threats.
5. Fraudulent issuance of special VAT invoices or other invoices used to fraudulently obtain export tax refunds or tax credits.
6. Falsely issuing more than 100 ordinary VAT invoices or an amount of more than RMB 4 million.
7. Private printing, counterfeiting or forgery of invoices, illegal manufacture of invoice security specialties, forgery of invoice supervision seal.
8. Having committed acts of tax evasion, evading the recovery of tax arrears, fraudulent export tax refunds, tax resistance, false invoicing, etc., failing to fulfil their tax obligations and leaving the supervision of the tax authorities before the execution of the audit case, and confirmed by the tax authorities to have fled (lost contact).
9. Illegal provision of bank accounts, invoices, certificates, or other facilities to taxpayers or withholding agents, resulting in non-payment or underpayment of taxes of more than RMB 1 million or fraudulently obtaining state export tax refunds.
10. A tax agent who violates tax laws and administrative regulations causing the taxpayer to fail to pay or underpay more than RMB 1 million in taxes.
11. Other tax violations of a bad nature, serious circumstances, and greater social harm.

 

• Information Publication

The tax authorities will publish the following information to the public:

1. Basic information about the subject of the breach of trust.
2. The main tax violation facts of the subject of the breach of trust.
3. Tax treatment, decisions on administrative tax penalties and legal basis.
4. Tax authorities that determine the subject of a breach of trust.
5. Other information that should be published under laws and administrative regulations.

 

If the subject of the breach of trust is a legal person or other organization, the name, unified social credit code (taxpayer identification number), registered address and the name, gender and identity document number of the legal representative, person in charge or the person actually responsible as determined by the effective decision of the People’s Court at the time of the breach of trust (with the year, month and day of birth numbers omitted) shall be published; if the subject of the breach of trust is a natural person, the name, gender and identity document number of the natural person shall be published (with the year, month and day of birth numbers omitted).

 

The taxation authorities shall publish the information of the subjects in breach of trust to the society through the websites of the taxation bureaus of the provinces, autonomous regions, municipalities directly under the central government and cities under the plan, and according to the actual situation of the region, they may also publish the information to the society through the bulletin boards of the taxation authorities, newspapers, radio, television, online media and other means as well as press conferences.

 

The tax authorities shall, in accordance with the provisions on tax credit management, award the tax credit level of the defaulting subject determined in accordance with the provisions of these Measures and included in the scope of tax credit evaluation, to grade D and apply the corresponding management measures for taxpayers of grade D.

 

The SAT collects the information on the defaulting subjects identified by local tax authorities and provides it to the “Credit China” website for public disclosure.

[1] http://www.chinatax.gov.cn/chinatax/n810341/n810825/c101434/c5171862/content.html

 

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