Editor's Note: On March 28, 2025, the State Administration of Taxation (SAT) heavily released the Tax Collection and Administration Law of the People's Republic of China (Revised Exposure Draft) and the Explanation on <The Tax Collection and Administration Law of the People's Republic of China (Revised Exposure Draft)> for public comment.2025 The Tax Collection and Administration Law (Revised Exposure Draft), on the basis of On the basis of "retaining the collection and management system that has been tested and proven in practice for many years" and "maintaining the basic structure of the current tax collection and management law", the 2025 Tax Collection and Management Law (Draft Revision for Public Opinion) is less innovative than the 2015 Tax Collection and Management Law (Draft Revision for Public Opinion), but it still brings many Significant Changes. Huatax lawyers have analyzed the key provisions of the current tax administration law, the 2015 Tax Administration Law (Draft Revision for Public Opinion) and the 2025 Tax Administration Law (Draft Revision for Public Opinion), summarized twenty-one important changes, analyzed the impacts of these changes on both the taxpayers and the taxpayers, and put forward targeted suggestions for revising and perfecting some of the provisions, which are expected to be discussed together with the readers.

01 Review of the four revisions of the current Tax Administration Law

China's Tax Administration Law was enacted and promulgated by the Standing Committee of the Seventh National People's Congress in September 1992, and came into force on January 1, 1993, and has undergone four revisions in 1995, 2001, 2013 and 2015 respectively. Of these four revisions, only the 2001 revision was a comprehensive one, in which the concepts of tax administration in accordance with the law and protection of taxpayers' rights and interests were implemented and advanced significantly, while the remaining three revisions were all minor amendments.

Review of the Revision of the Tax Administration Law in 1995: After the introduction of the value-added tax (VAT) system in 1994, special VAT invoices entered the stage of history, and there was only one revision of the Tax Administration Law in 1995, which adjusted the matter of printing invoices by provincial tax authorities to the effect that special VAT invoices would be printed and managed by the State Administration of Taxation (SAT), while other invoices would still be printed and managed by the tax authorities of the respective provinces.

Review of the Revision of the Tax Administration Law in 2001: The Tax Administration Law ushered in a major revision in 2001, with many highlights, paying more attention to the rule of law and the protection of taxpayers' rights and interests, and the more important revisions include the introduction of the main expression of the State Taxation Bureau and Local Taxation Bureau in the context of the separation of State and Local Taxation Bureaus, a clear modernization of tax administration information systems, and equipping the tax authorities with modern information technology. The taxpayers' right to know, right to confidentiality, right to tax refund and exemption, right to statement and defense, right to legal remedies and right to complaint and denunciation have been added; the principle that the internal duties and authorities of the tax authorities should be separated from each other and be subject to mutual constraints has been added; the calculation of late tax payment has been reduced from two thousandths of a percent per day to five ten thousandths of a percent per day; the restrictive circumstances and liability for tax preservation and enforcement have been clarified; and the systems of priority of taxation, subrogation and revocation have been added, right of subrogation, right of revocation, etc.; substantially adjusting and increasing the legal liability provisions for taxpayers, withholding agents and public officials of tax authorities, and clarifying the law enforcement responsibilities of tax authorities and the legal liabilities of taxpayers for stealing debts and resisting fraud, and the legal rigidity of the relationship between taxpayers and enterprises began to appear after this amendment, and the rule of tax according to law was put on the right track.

Review of the 2013 revision of the Tax Administration Law: The Law adjusted the 30-day period for tax authorities to issue tax registration documents to the day after receiving a business license.

Review of the 2015 revision of the Tax Administration Law: in line with the reform of the merger of state and local taxes, the subject expressions of the State Tax Bureau and the Local Tax Bureau were deleted.

A review of the four revisions to the Tax Administration Act shows that while the 2025 Exposure Draft of the Tax Administration Act revision is ostensibly only 10 years after the most recent revision in 2015, it is essentially more than 24 years after the core textual content of the Tax Administration Act was established in 2001, which demonstrates the necessity of a revision of the Tax Administration Act.

02 History of the 2025 Revised Exposure Draft of the Tax Administration Act

The historical origins of the 2025 Tax Administration Law Revision Exposure Draft issued by the SAT can be traced back as far as 2013. As early as 2008, the Standing Committee of the 11th National People's Congress (NPC) included the revision of the Tax Administration Law in its legislative planning, and the State Administration of Taxation (SAT) was responsible for initiating the revision work, and completed the draft for review and submitted it to the State Council in May 2013.On June 7, 2013, the Legislative Affairs Office of the State Council (LAO) of the State Council published the 2013 version of the draft amendment of the Taxation Administration Law for solicitation of opinions from all sectors of the society. As the Third Plenary Session of the 18th CPC Central Committee passed the Decision on Several Major Issues Concerning Comprehensively Deepening Reform in November 2013, which clearly put forward the specific requirements for deepening the reform of the fiscal and taxation system, the amendment to the 2013 version of the Tax Administration Law needed to be adjusted and improved in due course, and thus the Tax Administration Law was not revised in accordance with the published amendment in 2013, but only slightly amended in one place.The amendment to the 2013 version of the Tax Administration Law was also backdated. The 2013 version of the amendment to the Tax Administration Law was also revamped.

In January 2014, the State Administration of Taxation (SAT) submitted to the Legislative Affairs Office of the State Council (LAO) the "Letter on the Submission of Additional Revisions to the Tax Collection and Administration Law" (Taxation General Letter [2014] No. 50), suggesting that relevant revisions be added on the basis of the 2013 version of the revised Tax Collection and Administration Law, and in January 2015, the LAO of the State Council once again released the 2015 version of the revised Tax Collection and Administration Law for comments. Compared with the "minor revision" in 2013, the 2015 draft revision can be called a "major revision", which completely revolutionizes the original tax collection and management procedures and framework, and constructs a tax declaration - tax amount confirmation - tax recovery. The basic procedural framework of tax declaration - tax amount confirmation - tax recovery is constructed, and the "tax amount confirmation" is taken as the central part of tax collection and management, and provisions are made on the procedural rules of tax amount confirmation, rules of confirmation, and allocation of the burden of proof, etc. In addition, the 2015 draft amendment of the Tax Collection and Management Act can be regarded as a "major amendment". In addition, the 2015 Tax Administration Law (Draft Revision for Public Opinion) has many other innovations, such as the establishment of statutes of limitations of 5, 10 and 20 years for the recovery of taxes, the addition of legal liability for the taxpayer's negligence in non-payment of underpayment of taxes, the splitting of late payment into tax interest and late payment, and the allowance of settlement and mediation to resolve tax disputes, and so on.

Perhaps it was due to the overly innovative content of the 2015 consultation draft of the revised tax administration law that some controversy and skepticism ensued. Since the end of this public consultation, there has been no further public progress on the revision of the Tax Administration Law for a decade. Although the State Council listed the revision of the Tax Administration Law as an item of "urgently completing the drafting and review" in the legislative work plan of 2016 and 2017, and listed the revision of the Tax Administration Law as an item of "submitting to the Standing Committee of the National People's Congress for consideration" in the legislative work plan of 2018 and 2019, the revision of the Tax Administration Law will not be finalized before the end of the year. In the legislative work plan for 2018 and 2019, the revision of the Taxation Administration Law was listed as a project "to be submitted to the Standing Committee of the National People's Congress for consideration", but the revision of the Taxation Administration Law was not included in the legislative work plan for the following three years from 2020 to 2022. According to the author's understanding, during this period, the State Council only solicited opinions on a small scale and in camera on the revised version from the National Lawyers Association and some other organs and organizations, as well as experts and scholars, but the progress of the entire legislative process has slowed down, and there is no more public consultation. It was not until 2023 and 2024 that the State Council reintroduced the revision of the Tax Administration Law into the legislative work plan, but it was amended to "submit it to the Standing Committee of the National People's Congress for consideration". The change from the forward movement of "submit for consideration" to the backward movement of "prepare to submit for consideration" has, to a certain extent, sealed the fate of the 2015 version of the draft revision of the law on tax collection and administration, which has been discarded.

From the content of the Explanation on the Draft Revision of the Tax Administration Law for Soliciting Opinions disclosed by the State Administration of Taxation (SAT) on March 28, it seems that the 2025 version of the draft for soliciting opinions has broken with the 2015 version of the draft revision. The Explanation on the Draft Revision of the Tax Administration Law for Solicitation of Opinions does not mention the drafting and modification of the draft revision in 2013 and 2015, but only describes that the draft revision for solicitation of opinions was developed in accordance with the deployment of the legislative planning of the Standing Committee of the 14th National People's Congress by the General Administration of Taxation of the Ministry of Finance and focuses on the implementation of the deepening of the reform of the tax collection and administration as proposed by the 20th CPC National Congress and the 3rd Plenum of the 20th CPC Central Committee and the reform of the tax collection and administration as well as the reform of the tax collection and administration in the early part of 2021. The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council on the Opinions on Further Deepening the Reform of Tax Collection and Administration. Compared with the 2015 version, the 2025 Exposure Draft follows the principle of both innovation and correctness, and while bringing many significant changes, it also abandons many of the innovative provisions of 2015, retains the original framework of the basic procedures of tax collection and administration, and is generally easier for both the taxpayers and the taxpayers to accept, and is easier to land in the future, so that it can be said that a comprehensive revision of the collection and administration law has finally entered the fast lane. Although the 2015 version was abandoned, the author believes that many of its innovations still have some value and are worth taking into account when studying and exploring the 2025 version of the revised draft.

03 Twenty-One Significant Changes Brought About by the Exposure Draft of the 2025 Levy Law Revisions

(i) Establishment of a cross-sectoral mechanism for the provision and sharing of tax information, and a shift in tax governance from institutional supervision to supervision of the entire population

Article 6 of Chapter 1 General Provisions of the Tax Administration Law 2025 (Revised Draft for Public Opinion) makes systematic provisions on the tax-related information management mechanism, establishing a mechanism for the provision and sharing of tax information by the competent tax authorities under the State Council, and granting the tax authorities the legal authority to inquire tax information from the public security, financial management, customs and other departments, as well as the legal obligations of the relevant departments to cooperate and assist. From the four departments launching the "fight against fraud" special action in 2018 to the formation of a working mechanism for eight departments across the country to jointly combat tax-related crimes, the multi-departmental joint tax control mechanism has continued to expand and has accumulated a great deal of experience in practice.2025 The Tax Levy and Administration Law (Revised Draft for Public Opinion) establishes, through legislation, the "tax-led, departmental coordination" mechanism. The Tax Levy Control Law (Draft for Public Comments) 2025 establishes through legislation a tax information provision and sharing mechanism that is "tax-led and departmental coordinated", which is intended to fix the existing successful experience in the form of a law, effectively solving the problem of the insufficient legal basis for information exchange in practice, and clearing up the systematic obstacles to the regularization of inter-departmental joint law enforcement.

The third paragraph of Article 6 of the Tax Administration Law (Revised Draft for Public Comments) of 2025 includes natural persons in the scope of tax information reporting obligations, enhancing the supervision of tax information on natural persons, which will mark the shift of China's tax governance from institutional supervision to universal supervision, and will be conducive to enhancing the level of personal tax collection and management on natural persons within emerging businesses, as well as solving the problem of cross-border tax evasion supervision for high net worth individuals.

In addition, the Tax Administration Law 2025 (Revised Exposure Draft) adds a new confidentiality provision that strictly limits the scope of use of taxpayer information obtained across departments and explicitly prohibits unauthorized disclosure. This provision not only safeguards the necessary information sharing needs for tax collection and management, but also implements the compliance requirements of other laws such as the Personal Information Protection Act and the Data Security Act.

(ii) Providing a legal basis for the practice of the two mechanisms of joint incentives for tax compliance and joint penalties for breach of trust

China's joint disciplinary mechanism for tax violations began to be implemented in 2014 and was improved in 2016. At present, the joint disciplinary objects stipulated in the Memorandum of Cooperation on the Implementation of Joint Disciplinary Measures for Parties in Cases of Major Tax Violations (2016 Edition) are major tax violation subjects announced by tax authorities in accordance with the Measures for the Administration of Information Publication on Major Tax Violation Subjects, and the disciplinary measures cover customs, inspection, taxation, entry and exit, government subsidies, restriction of high consumption, financial loans, and other Twenty-seven areas. Joint incentives for tax integrity were implemented in 2016, and are currently regulated on the basis of the Memorandum of Cooperation on the Implementation of Joint Incentive Measures for Tax Credit A-Level Taxpayers, with incentives targeting Tax Credit A-Level Taxpayers.

For the first time, the Tax Administration Law (Revised Draft for Public Comments) of 2025 systematically builds a unified tax integrity system at the legal level to promote tax compliance through the two-way mechanism of "praising integrity and punishing dishonesty", which provides a unified support for the existing decentralized normative documents. In the foreseeable future, the rule of law of the tax integrity system will accelerate the release of institutional dividends, and the objects and measures of joint punishment and incentives are expected to be expanded and upgraded. Credit taxpayers will be given priority in the allocation of social resources in more fields, and tax offenders and taxpayers with bad credit will find it difficult to move forward, and the rigid constraints imposed by the law on the behavior of bad credit will force enterprises to operate in a compliant manner, which will ultimately promote the transformation of tax governance from passive supervision to active trustworthiness. This legislative initiative will effectively promote tax law compliance and tax compliance.

(iii) For the first time, the legal standards and requirements for tax authorities to investigate and handle cases of tax violations have been put forward, which is a major step forward.

Paragraph 2 of Article 13 of Chapter 1 of the General Provisions of the Tax Administration Law (Revised Draft for Public Comments) of 2025 puts forward for the first time the legal standards for tax authorities to investigate and handle cases of tax violations, which refer to the provisions of Article 37 of the Provisions on Procedures for Handling Tax Audit Cases, and adds the general principle of "handling the cases in accordance with the law and in a fair and impartial manner". Requirements. Generally speaking, this article expands the trial requirements of tax inspection cases to the field of tax authorities investigating and dealing with tax violations, and establishes the basic standards and evidential requirements for tax authorities to deal with cases, which is of great significance in standardizing the law enforcement of tax authorities and safeguarding the rights and interests of taxpayers. While fully recognizing this, the author believes that there is still room for further improvement in the revision of this article.

Firstly, Article 13, paragraph 1, is a recusal provision, and has no internal logic with paragraph 2 on legal standards for investigating and handling cases of tax violations, so it is recommended that paragraph 2 be made into a separate article in order to emphasize its important legal status and function.

Secondly, Although the basic requirements of this article, such as "clear facts and sufficient evidence" and other basic requirements, have set the law enforcement standards, they are not fully equivalent to the responsibility of taxpayers for the truthfulness, accuracy and completeness of tax declarations, and the principle of attribution is not clear, the standard of proof is not high, and the objectivity of the investigation and collection of evidence is not required. It is suggested that the principle of no-fault presumption for taxpayers be added to the provisions, the principle of fault attribution in tax violation cases and the responsibility of tax authorities for proving fault be clarified, and the wrong way of thinking of some grass-roots tax authorities in requesting taxpayers to "prove their own innocence" and "presumption of fault" be corrected. Strengthening the objectivity requirement of investigation and evidence collection, requiring comprehensive collection of both favorable and unfavorable evidence for taxpayers, and prohibiting selective evidence collection; raising the standard of evidence proof for tax violations, which should not be applied to the principle of preponderance of evidence of "sufficient evidence" but to the standard of "indeed sufficient evidence", requiring core evidence to be collected, and requiring the taxpayer to prove that the taxpayer is innocent of the crime. Instead of applying the preponderance of evidence principle of "sufficient evidence", the standard should be applied, requiring core evidence to be directly probative and exclusive, while the preponderance of evidence principle of "sufficient evidence" can be followed in areas such as tax adjustments.

In summary, it is recommended that article 13, paragraph 2, be made into a separate article and amended to read:

"The tax authorities shall follow the principle of presumption of no fault on the part of the taxpayer in investigating and dealing with tax violations, investigate and collect evidence objectively, impartially and comprehensively, so that the facts are clearly identified, the evidence is indeed sufficient, the basis for application is correct, the procedures are lawful, and the matter is dealt with fairly and impartially in accordance with the law."

(iv) Establishment of a taxpayer identification number system and major adjustments to tax registration matters

The relevant articles in Section 1 of Chapter 2 Tax Administration of the Tax Administration Law (Revised Draft for Public Comments) of 2025 on taxpayer identification and registration have made comprehensive adjustments to procedural matters such as taxpayer identification number, tax registration, and tax deregistration. Firstly, the unified social credit code and the civil identity number will be used as the tax identification for enterprises and natural persons respectively, and special subjects will be assigned the code by the tax authorities to realize the full coverage of taxpayer identity. This adjustment will avoid the problem of duplicated registration, and at the same time lay the foundation for strengthening the tax collection and management of natural persons. Secondly, the tax registration process has been substantially simplified. The identification number is automatically obtained when the enterprise is set up, and the business license is directly used as the tax registration document, eliminating the separate registration procedure. Finally, new tax clearance certificate is added to the cancellation procedure, embedding the protection of tax claims into the exit mechanism of market entities and forcing enterprises to standardize tax clearance. Overall, both the abolition of the tax registration system and the prohibition of taxpayers from repeatedly providing information will help reduce the procedural burden on taxpayers.

However, Article 18 of the 2024 Revision still has some room for revision and improvement. In the author's view, the first paragraph of Article 18 directly regards the registration of enterprise establishment as tax registration, and the second paragraph stipulates that the market supervision department shall inform the newly established enterprises of their tax obligations in accordance with the law, which lacks the tax counseling responsibility of the tax authorities for the newly established enterprises. Newly-established enterprises often have to determine the types of taxes to be declared and paid according to their production and business activities, and the tax declaration deadlines for each type of tax, whether monthly or quarterly, as well as learning the operation and use of the e-Tax Bureau, digital and electric invoices, and the tax declaration system, etc., and the individual enterprises also need to install tax-control devices. Combined with the revision of Article 73 of the Tax Administration Law (Revised Draft for Public Comments) of 2025 on tax evasion, which stipulates that enterprises registered in accordance with the law that engage in taxable behavior without declaring it directly constitutes tax evasion. If a newly-established enterprise completes the receipt of business license, and the market supervision department simply informs the tax obligation, and the tax authority does not provide effective tax counseling to the enterprise, resulting in errors and omissions in the handling of the above tax-related matters, so that the occurrence of taxable acts without declaring the tax in an unintentional manner, then it has to be punished for tax evasion, which is obviously unreasonable.

Therefore, the author is of the view that a paragraph should be added after paragraph 2 of article 18 to clarify the tax counseling responsibility of the tax authorities, that is, to follow the concept of equal and common governance of taxation between the two parties and to make joint efforts to promote tax compliance and tax payment in accordance with the law. It is recommended that new provisions be added:

"The tax authorities shall provide timely counseling and training on tax policies, tax approval, determination of the levy period, tax declaration, differences in taxes, the operation and use of the electronic tax system, and the installation and use of tax-control devices for taxpayers engaged in production and business operations after the completion of the establishment of registration."

In this way, the taxpayer, after receiving tax counseling and training from the tax authorities, understands and masters the tax policy and his/her own tax declaration obligations, but still appears to have unpaid and underpaid taxes when he/she fails to declare the taxable behavior, the tax authorities may determine that it constitutes tax evasion on the basis of solid and sufficient evidence.

(v) Providing a legal basis for electronic vouchers such as digital invoices and paper VAT invoices will be withdrawn from the stage of history.

Since the pilot implementation of digital invoices on December 1, 2021, the pilot areas have been gradually expanded to the whole country, and the paper version of special VAT invoices has been gradually replaced by digital invoices.2025 Article 23 of the Tax Levy and Administration Law (Revised Exposure Draft) has also responded to this development in practice, establishing by law the legal validity of the electronic vouchers, such as digital invoices, as the basis for bookkeeping, accounting and calculation of taxable amount. It establishes the legal effect of digital invoices and other electronic documents as the basis for bookkeeping, accounting and calculation of taxable amount, providing legal support for further promoting the digital transformation of tax collection and administration.

In addition, Article 26 of the Tax Administration Law 2025 (Revised Exposure Draft) also makes special amendments to the tax-control device management system, highlighting the differentiated regulatory orientation. Although paper-based VAT invoices will soon be withdrawn from the stage of history and the matching tax-control disk will also be withdrawn from the stage of history, tax-control devices other than tax-control disks are still necessary. For specific industries such as gas stations, although the VAT special invoices are fully electronic, the tax-control devices are still retained as key regulatory tools. The legislative expression of "promoting the use of tax-control devices in a planned manner" in this amendment essentially provides authorization for the tax authorities to establish a hierarchical and classified supervision mechanism, and it is expected that the supervision of tax-control behaviors in key industries will be upgraded in the future by dynamically updating the technical standards of the tax-control devices and reinforcing the rules of data tampering prevention.

(vi) Explicitly requiring taxpayers to be responsible for the truthfulness, accuracy and completeness of their declarations, with no mention of responsibility for legality

Article 28, paragraph 3 of Chapter 2, Tax Administration, Section 3, Tax Returns of the Tax Administration Law of 2025 (Revised Exposure Draft) clearly stipulates that taxpayers are responsible for the truthfulness, accuracy and completeness of their tax returns. The author recognizes that this new article stipulates that taxpayers are responsible for the three aspects of the declaration, with authenticity requiring that the information submitted is true and free of tampering, accuracy pointing to correct data calculation, and completeness emphasizing that the information is complete and free of omissions and concealment.

It should be noted that the new article does not mention that the taxpayer is responsible for the legality of the tax return, whereas the 2015 version of the draft amendment requires the taxpayer to be responsible for the legality of the tax return. The author believes that it is appropriate not to require taxpayers to be independently responsible for the legality of the declaration. The reason is that the tax law is difficult and complex, and ordinary taxpayers do not have the professional skills and knowledge to independently determine whether the tax act is legal, so it is not realistic to criticize the legality. In the author's opinion, the legality of tax declaration should be shared by tax authorities and taxpayers. Under the concept of common governance of taxation, taxpayers should pay taxes in good faith, and the tax authorities should undertake the duties of counseling and auditing to ensure the legality of tax declaration. The revised draft does not require taxpayers to be responsible for the legality of tax returns, and to a certain extent, it echoes the author's earlier suggestion of adding provisions on tax counseling by tax authorities.

The author suggests that, in order to implement the concepts of joint responsibility for the legality of tax declarations and common governance of taxation, it is necessary not only to increase the tax counseling provisions of the tax authorities, but also to add another provision on the duty of the tax authorities to review the legality of tax declarations. For the tax declaration of particularly difficult and complicated tax matters, a special legitimacy audit mechanism of tax authorities can be added. The experience of special audit of land value-added tax settlement can be drawn upon here. In the field of land value-added tax liquidation, after an enterprise makes a liquidation declaration, the tax authorities are required to initiate a specialized audit procedure. It is with this system that we can hardly see any illegal cases of land value-added tax evasion by real estate development enterprises in practice, and the related disputes are all disputes in the nature of tax adjustments, and the relationship between tax enterprises and taxpayers is relatively stable on the whole. Therefore, the author suggests that a new article should be added after Article 28, stipulating that the tax authorities should initiate special examination procedures for tax returns of taxpayers in respect of difficult and complicated tax-related matters such as land value-added tax settlement, daily tax declaration of key tax source enterprises, and major asset transactions of enterprises above designated size. Through this mechanism, tax authorities can strengthen the audit function in complex tax matters to ensure the legality of taxpayers' declarations. This can effectively avoid the recurrence of cases with major social impacts, such as Zhijiang Wine Industry being investigated for 30 years, the case of full-scale investigation in the coal field in Inner Mongolia and other places, as well as the case of Ningbo Bohui, so as to practically safeguard the stability of the development of the private economy and the sustainability of the tax source.

It is suggested that a new provision be added after article 28:

"The tax authorities may conduct special audits of difficult and complex tax-related declarations such as land value-added tax clearance declarations, tax declarations of taxpayers with key tax sources, tax declarations of major asset transactions, and other difficult and complex tax-related declarations, to ensure that taxpayers' tax declarations are in compliance with tax laws, administrative regulations and the specific provisions of tax policies."

(vii) Policy space for local fiscal incentives retained, but authorized collection tightened

There are two points of interest in Article 36 of Chapter III Tax Collection of the Tax Administration Act, 2025 (Revised Exposure Draft).

First, the first paragraph of Article 36 adjusts "tax reduction and exemption" to "tax preference", and the author analyzes that its purpose is to include approved levies through semantic expansion. In practice, platform enterprises generally rely on financial rebates, operating income tax approved low tax rate and other policies, the future will be subject to the limitations of the provisions of Article 36. In the future, if the approved levy treatment agreed in the investment promotion agreement signed between the enterprise and the local government is in violation of the laws, administrative regulations and provisions of the State Council, the tax authorities may not recognize it or adjust it retrospectively in accordance with the law.

Second, the second paragraph of Article 36 stipulates that local governments "shall not validate decisions on tax incentives made without authorization in violation of laws, administrative regulations and the provisions of the State Council", which has changed the expression of the 2015 draft revision of the Tax Administration Law that "except for laws, administrative regulations and the provisions of the State Council, no unit shall break through the national unified tax system to provide tax incentives". unit shall not break through the national unified tax system to provide tax incentives", reflecting the shift from an across-the-board prohibition to the preservation of space. According to this paragraph, the tax preferences formulated by local governments at all levels are valid if they do not violate the prohibitions. In the author's opinion, according to the current revised version, the space for local governments to introduce financial incentives is still retained, and tax incentives that do not violate laws, administrative regulations and the State Council can still be implemented, such as financial rebate policies linked to production capacity and other operational benefits that are not directly related to tax payment.

(viii) Clarifying the authority of tax authorities to utilize big data to analyze and assess tax risks.

Article 38 of Chapter 3 of the Tax Administration Law (Revised Draft for Public Opinion) of 2025 adds that tax authorities have the right to utilize tax-related big data to conduct risk analysis on the truthfulness, accuracy, and completeness of a taxpayer's tax declaration, assess the amount of tax payable or the amount of tax that should be discharged, and implement countermeasures that match the level of risk. However, the article only mentions "implementing countermeasures that match the level of risk", but does not specify what kind of countermeasures, nor does it mention the corresponding protection of taxpayers' rights, which needs to be adjusted.

In the author's view, given that taxpayers are responsible for the triple nature of tax declarations, and that the tax authorities only use big data information to review the triple nature, which is not direct and circumscribed, it is not reasonable to hastily make risk assessment conclusions and take measures without seeing the original information of taxpayers' tax declarations. Big data is only a means, not an end. It is not necessarily prudent to deliver tax enforcement entirely to big data processing. Back in 2016, the tax authorities identified a large number of consumption tax payment risks of petrochemical trading enterprises with variable tickets through the Jin San system and simply delivered these risk lists to the provinces for investigation. The local tax jurisdictions dealt with the enterprises included in the risk lists directly as false invoicing, while the real subjects of consumption tax evasion were not investigated, resulting in a number of wrongful cases that treated the symptoms but not the root cause. The trading enterprises changed their invoices and ostensibly became the consumption tax payment risk households recognized by the big data, but in essence, the main body of consumption tax evasion was the production enterprises, not these trading enterprises, and the risk assessment conclusions formed by the big data deviated from the objective actual situation.

Therefore, the author suggests that rules should be set up for taxpayers to know the right to information, the right to make statements and defense and the right to amend the declaration, so as to avoid the defects of big data through the mechanism of tax co-governance between the taxpayers and the taxpayers. After completing the risk assessment, the tax authorities should inform the taxpayers of the specific risk matters, give them the opportunity to state their defense, and allow them to amend their declaration through self-examination. Under the concepts of tax co-rule and tax governance by numbers, procedural justice is the basis for the legality of tax administration, and it is necessary to avoid the direct initiation of tax audits without the procedures of risk notification, statement and defense, and amendment of declarations, etc., and to ensure that taxpayers can fully exercise their rights in the process of risk assessment.

It is proposed that article 38 be amended to read:

"The tax authorities have the right to utilize tax-related big data, such as information declared by taxpayers and withholding agents and third-party information obtained in accordance with the law, to carry out risk analysis of the truthfulness, accuracy and completeness of tax declarations made by taxpayers and withholding agents, to assess the amount of tax payable or the amount of tax that should be discharged and to notify taxpayers and withholding agents of the results of the risk analysis and assessment.

Taxpayers and withholding agents shall submit the original information of the tax declaration to the tax authorities, and have the right to make a statement or defense to the tax authorities, or amend the declaration through self-examination. The tax authorities shall review the results of risk analysis and assessment and implement countermeasures matching the level of risk."

(ix) Expansion of anti-avoidance tax adjustments from related-party to unrelated-party transactions and from enterprises to individuals

Article 40 of Chapter 3 of the Tax Collection Law (Revised Draft for Public Comments) of 2025 creates two types of anti-avoidance adjustments. The first paragraph clarifies that business dealings between a taxpayer and a related party should follow the principle of independent transactions, or else the tax authorities have the right to make reasonable adjustments; and the second paragraph expands to unrelated party transactions, stipulating that if a taxpayer implements an arrangement that does not have a reasonable business purpose to reduce, exempt, or postpone the The second paragraph extends to unrelated party transactions, stipulating that if a taxpayer implements an arrangement without a reasonable commercial purpose to reduce, exempt or postpone the payment of tax, or to increase or advance the refund of tax, the tax authorities have the right to make reasonable adjustment. This provision also extends the subject of anti-avoidance from enterprises to natural persons, which is in line with the tax adjustment provision in Article 8 of the Individual Income Tax Law.

In terms of the burden of proof, the tax authorities need to prove that the taxpayer's behavior does not conform to the principle of independent transaction or does not have a reasonable commercial purpose when making tax adjustments, but the actual operation may face difficulties in proof. The author speculates that in the future, the State Council may formulate specific regulations to enumerate the presumptions of specific transaction behaviors of taxpayers, so as to simplify the proof procedure and enhance the operability of the anti-avoidance provisions.

(x) Late payment fees become late payment fees, unchanged by the punitive interest rate of 5/10,000 per cent per day

Article 41 of Chapter 3 of the Tax Collection Law (Revised Draft for Public Opinion) of 2025 adjusts "late payment" to "late payment", trying to circumvent the restrictive provisions of Article 45 of the Administrative Compulsory Law that the late payment can not exceed the principal amount by the change of name. Restrictive provisions, but its daily interest rate of five ten thousandths of a percent of the standard has not been changed, the equivalent annual interest rate of up to 18%, much higher than the People's Bank of the same period of the Loan Market Quotation Rate (LPR) and the reasonable scope of the tax interest, the essence of the punitive characteristics.

The key to applying the Administrative Compulsory Law or not is not in the name, but in the determination of the legal nature. The author suggests that, for late payment of tax, both tax interest and late payment can be levied, and the former may not apply the Administrative Compulsory Law, but the latter needs to follow the relevant provisions of the Administrative Compulsory Law, which should draw on the program of the draft amendment of 2015, and incorporate late payment into the enforcement measures on the basis of stipulating the tax interest and making it clear that the tax interest shall be calculated from the expiration of the period for the legal settlement of the tax and allowing the State Council to formulate the standard of interest rate separately. interest rate standards; late payment fees are calculated from the expiration date of the tax payment period determined by the tax authorities' decision on tax collection, and are implemented in the enforcement measures.

In practice, there have been a number of jurisprudence cases in support of the principle that the late tax fee should not exceed the principal amount of the tax. Excessive late payment fees not only increase the burden of taxpayers, but also violate the principle of proportionality. The Administrative Compulsory Law sets the upper limit of late payment fee, aiming at curbing the phenomenon of "sky-high late payment fee", providing a clear expectation for the parties concerned, prompting them to fulfill their obligations actively, balancing the tax collection and management with the protection of the rights and interests of the counterparts, and urging the tax authorities to take coercive measures in a timely manner to improve the efficiency of administrative management, which is in line with the purpose of tax collection and management.

(xi) Tax authorities may enforce the funds in taxpayers' accounts on third-party payment platforms such as Alipay and WeChat

Articles 43 and 45 of Chapter 3 of the Tax Collection Law (Revised Exposure Draft) of 2025 explicitly include non-bank payment institutions in the scope of application of administrative coercion, and the tax authorities may notify non-bank payment institutions to freeze and transfer the balance of the taxpayer's payment account in accordance with the law. This new article expands the scope of compulsory measures and enforcement by tax authorities to third-party payment platforms such as Alipay and WeChat, strengthening the ability of tax authorities to recover tax.

(xii) Subjects prevented from leaving the country by tax-defaulting enterprises have been expanded from legal persons to principals and real controllers.

Article 51 of Chapter 3 of the Tax Collection Law (Revised Draft for Public Comments) of 2025 expands the scope of subjects prevented from leaving the country for tax-defaulting enterprises from legal persons to principals and de facto controllers, aiming to urge enterprises to pay their taxes in a timely manner by strengthening the constraints on the substantively responsible subjects and thus safeguarding the state's collection of taxes.

However, this provision may face obstacles at the implementation level. On the one hand, the current laws and regulations do not define the concept of the principal person in charge of the company, although the Company Law defines the actual controller as "the person who can actually dominate the behavior of the company through investment relationship, agreement or other arrangements", but its identification standard is still significantly ambiguous, and it is often difficult for the tax authorities to identify the control relationship within the enterprise. control relationship within the enterprise. On the other hand, there is no clear procedure for correcting mistakes made by subjects who are wrongly classified as exit-restricted objects, which may lead to more disputes.

In addition, according to the Implementation Measures for Preventing Tax Defaulters from Leaving the Country, when the legal representative is changed, the changed legal representative is the target for preventing departure.2025 The Tax Collection and Administration Law (Revised Exposure Draft) does not change this rule of determination, but restricting the departure of the changed legal representative from leaving the country may constitute undue implication if the changed legal representative is not materially at fault for tax defaults and the original legal representative may evade punishment by maliciously changing his registration. However, if the changed legal representative is not materially at fault for the tax default, restricting him from leaving the country may constitute improper implication, while the original legal representative may evade disciplinary action through malicious change of registration. Therefore, it is necessary to improve the corresponding supporting mechanism to address the above problems during the revision process.

(xiii) Priority of taxes over pledges of mortgages will not apply to insolvent enterprises

Article 45, paragraph 1, of the current Tax Administration Law stipulates that if a tax claim arises before a secured claim, the tax claim shall be paid in priority, whereas the Enterprise Bankruptcy Law explicitly stipulates the right of exclusion of a security right, i.e., in bankruptcy proceedings, a secured claim shall have priority over the payment of bankruptcy expenses, co-beneficial debts, employees' claims, tax claims, and ordinary claims to the extent of the realization of the secured property. The conflict between the provisions of the Tax Administration Law and the Enterprise Bankruptcy Law has led to disputes in practice regarding the order of satisfaction of claims in bankruptcy proceedings where tax claims and secured claims coexist. The first paragraph of Article 52 of the Revised Draft of the Tax Collection and Administration Law of 2025 clarifies that the order of satisfaction of tax claims in bankruptcy should follow the provisions of the Enterprise Bankruptcy Law by creating an exception "unless otherwise provided for in the Enterprise Bankruptcy Law of the People's Republic of China", reiterating that Reaffirming the principle of "special law prevails over general law", the provisions on priority of tax claims over mortgages and pledges will not be applicable to the bankrupt enterprises, thus resolving the conflict of application of the above laws. The amendment of this provision reflects the principle that claims in rem have priority over claims in equity, and also provides reasonable and fair protection for other creditors in bankruptcy proceedings, reflecting the social principle that "the State does not compete with the people for profits".

(xiv) Introducing the rule of denial of legal personality, whereby the tax authorities may recover tax directly from shareholders

The new Article 56 in Chapter 3 of the Tax Collection Law (Revised Draft for Public Comments) of 2025 introduces the rule of denial of legal personality in Article 23 of the Company Law into the field of tax collection and management, and makes it clear that for the contributor who abuses the independent status of the legal person and the limited liability of the contributor, and who avoids the tax through the pumping of funds or the malicious cancellation of the tax, the tax authorities may break through the principle of limited liability of the company and recover the tax and the tax late payment directly from the contributor. Late Payment of Taxes. Although this provision fills the gap of the system of tax claims penetrating recourse, and clarifies the applicable path of denial of legal personality in the field of taxation, the author believes that the tax authorities should still take the people's court judicial review mechanism established by the Company Law as a precondition for the "piercing of the corporate veil". -However, the author believes that the judicial review mechanism established by the Company Law should still be a precondition for the tax authorities to "pierce the corporate veil", which means that if the tax authorities claim that the contributors have abusive behaviors, they should file a legal person personality denial lawsuit to the People's Court according to the law, so that the judicial authorities can make a substantive review and decision based on the facts and evidences on the existence of the abusive behavior of legal person's independent status and limited liability of the contributors, instead of directly recognizing the denial of the legal person personality by the administrative procedure, so as to avoid that the administrative power overrides the judicial power to Civil legal relations to make final judgments.

Therefore, it is recommended that this article be amended to read:

"If the contributor of a taxpayer abuses the independent status of a legal person and the limited liability of the contributor, adopts such means as absconding with funds or writing off the funds, resulting in the tax authorities being unable to recover from the taxpayer the unpaid or underpaid tax or the over-refunded tax, and if the circumstances are serious, the tax authorities may request the People's Court to hold the contributor liable for the back payment of tax in accordance with the relevant provisions of the Company Law of the People's Republic of China, joint and several liability for late payment of taxes."

(xv) New non-refundable rule for willful overpayment of tax for specific purposes

The Exposure Draft of the 2025 Revision of the Tax Administration Law adds a second paragraph to the current Tax Administration Law's provision on refund of overpayment of tax by taxpayers, i.e., taxpayers shall not be refunded for overdeclaration of taxes paid for the purpose of obtaining financing and other purposes. In the author's opinion, this new provision violates the principle of tax law and is recommended to be deleted:

According to the principle of statutory taxation, Article 59 (1) and (2) belong to the situation of tax refund without legal basis from the beginning. The difference lies in that the reason for overpayment of tax in the first paragraph is the taxpayer's non-subjective fault factors such as wrong understanding of the tax law and calculation error, while the second paragraph is the taxpayer's subjective purpose of obtaining financing, listing, etc., which leads to the overpayment of tax, but the two of them do not have the essential elements required for establishment of the legal tax obligation. However, in both cases, there is no element of taxation required for the establishment of statutory tax obligations, and the tax legal relationship has not existed since the beginning, and the overpayment of tax based on the fictitious "tax obligations" should be refunded, and the non-refund of tax in the case of the second paragraph violates the principle of tax law.

In the practice of tax collection and management, for the cases listed in the second paragraph, there are many cases in which listed companies with falsely increased performance applied for corrective declaration and tax refunded by the tax authorities according to the Advance Notification Letter of Administrative Penalty and Market Entry Prohibition issued by the Securities and Futures Bureau. In the author's opinion, the behavior of overpayment of tax for the purpose of obtaining financing and improving performance has disturbed the order of tax administration to a certain extent, which essentially belongs to the situation of fabricating false tax basis without causing loss of tax, and can be cited as Article 75 of the "Exposure Draft" (fabricating false tax basis without causing non-payment of underpayment of tax, the tax authorities shall order correction and impose a fine of less than 50,000 yuan) for disciplinary action, but the enterprises should be refunded the overpayment of tax according to the "Administrative Penalty and Market Prohibition Prior Notice" of the CSRC. However, the overpaid tax should be refunded, otherwise it is in conflict with the principle of tax law and violates the basic administrative principle of "equal punishment".

(xvi) All-round expansion of tax inspection powers

In Chapter 4, "Tax Inspection", the Exposure Draft of the Revision of the Tax Administration Law of 2025 has substantially revised the inspection authority of the tax authorities in the light of the current tax administration practice and administration technology, and expanded the inspection authority, with the following seven main dimensions of changes:

First, the scope of the inspection object has been expanded. In addition to checking the taxpayer's and withholding agent's books, vouchers and other information, it can also verify the tax-related books and information of taxpayers' income-generating units and individuals, and it makes it clear that parties other than taxpayers and withholding agents should also be subjected to tax inspections, reflect the situation truthfully, and provide relevant information. The expansion of the scope of inspection objects in this article has opened up the business chain and formed a cross-audit of upstream and downstream data.

Secondly, the space for field inspection has been broadened. In addition to taxpayers' production and business premises and goods storage places, tax authorities can also inspect goods hosting offices and logistics enterprises, which strengthens the supervision of third-party warehousing and other new modes of goods delivery.

Thirdly, the tax authorities are explicitly given the authority to access in writing the transaction data of e-commerce platforms, network trading platforms and electronic payment institutions, so that online transactions are more transparent and the flow of funds is more traceable.

Fourthly, a cross-departmental coordination mechanism has been established. Tax authorities are authorized to inspect, inquire and copy taxpayers' property registration and identity information from relevant departments, so as to break down property information barriers.

Fifth, improving the means of capital supervision. The scope of inspection has been extended to new types of financial accounts, such as securities trading and settlement fund accounts and non-bank payment accounts, covering all types of capital flow tracks in the modern payment system.

Sixth, expanding the evidence collection measures in the process of tax inspection, enriching the traditional means of evidence collection, and making it clear that the tax authorities can take such means of evidence collection as making inquiry notes, implementing seizure, impoundment, appraisal, and prior registration and preservation when investigating cases of violation of the law; and at the same time, introducing the measures of electronic evidence collection, and granting the tax authorities the authority to seize and impound the original storage medium and its necessary connecting accessories and other law enforcement authorities. In the author's opinion, because of the virtual and technical characteristics of electronic data, we should draw on the Provisions of the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security on the Provisions on Several Issues Concerning the Collection, Extraction, and Examination and Judgement of Electronic Data for Handling Criminal Cases (Fafa [2016] No. 22) and Rules for the Public Security Organs to Handle the Forensic Evidence of Electronic Data for Criminal Cases to synchronize the establishment of a supporting system of forensic norms and pay attention to the collection of electronic evidence. The authenticity, completeness and legitimacy of the collection of electronic evidence, balancing the efficiency of law enforcement with the protection of the rights and interests of the parties concerned.

Seventh, expanding the scope of application of preventing exit. During the investigation and handling of major tax violation cases, with the approval of the provincial tax authorities, the immigration authorities can be linked to implement exit restrictions on the taxpayers involved in the cases, as well as their legal representatives, main persons-in-charge and actual controllers, etc., so as to expand the application of the original measures of preventing exit at the stage of tax arrears to the stage of investigation and handling of the cases.

(xvii) Increased the burden of proof on the party concerned after denying the evidence collected by the tax authorities

2025 tax administration law revised draft for comment chapter 4 tax inspection article 66, paragraph 3 of this new article, provides for tax inspection procedures in the confirmation of the effectiveness of the evidence, through the parties to the evidence of the recognition of the evidence to determine the effectiveness of the evidence, for the enhancement of the efficiency of the administration of the tax has a certain significance. For this amendment, the author believes that the need to clarify the party denies the evidence can not be sufficient evidence of the effect, to avoid the reversal of the burden of proof, it is recommended that reference to the supreme people's court on administrative litigation evidence of a number of issues of the provisions of the provisions of article 67 (law release [2002] No. 21), for the parties to be denied but can not provide sufficient evidence to rebut the case, should be integrated into the whole review of the case to determine that evidence of the effectiveness of proof, in order to realize the levy management efficiency. In order to achieve a balance between the effectiveness of the levy and the protection of rights, the proof effect of the evidence shall be examined in the light of the circumstances of the whole case.

Therefore, it is recommended that this paragraph be amended to read;

"If the party concerned expressly recognizes the evidence collected by the tax authorities, the probative value of the evidence may be determined. If the party denies it, it shall adduce sufficient evidence; if the party denies it but cannot provide sufficient evidence to refute it, it may review the whole case and determine the probative value of the evidence."

(xviii) Tax evasion has been replaced by tax evasion, which has basically realized convergence with the Criminal Law and the judicial interpretations of the two high courts on tax-related matters.

The first paragraph of Article 73 of the revised draft of the Tax Administration Law of 2025 integrates the four types of tax evasion behaviors in Article 63(1) and non-declaration behaviors in Article 64(2) of the current Tax Administration Law into two types of tax evasion behaviors, namely, "false tax declaration" and "non-declaration. It is undoubtedly a progress to solve the long-existing problem of the lack of connection between execution and punishment. However, the core issue of what attribution principle should be applied has not been clarified. Whether to apply the principle of fault, the principle of presumption of fault or the principle of no-fault in determining whether a taxpayer constitutes tax evasion has been a great controversy in the practice of tax enforcement. There is no essential difference between tax evasion and tax evasion in terms of objective behavior and results; the core difference lies in the subjective state of the taxpayer. In the past, the State Administration of Taxation (SAT) has repeatedly explained the subjective state of tax evasion. It emphasized in the Interpretation of the New Tax Collection and Management Law and its Implementing Rules that "the unpaid and underpaid tax caused by the taxpayer can be caused by a variety of circumstances, and even sometimes by the taxpayer's subjective intent, such as tax evasion and tax fraud"; and in the Circular of the State Administration of Taxation on Further Improving the Investigation and Handling of Relevant Work in Cases of Tax Violations ( No. 30 of the General Administration of Taxation [2017]), it is made clear that "for those who have not adopted deception or concealment means, but only due to inaccurate understanding of tax policies, calculation errors and other mistakes that lead to non-payment or underpayment of taxes, ...... is not characterized as tax evasion"; in addition, in the General Administration of Taxation Letter [ 2016] No. 274, General Taxation Letter [2013] No. 196, and State Taxation Office Letter [2007] No. 513, it is pointed out that subjective intent is a constituent element of tax evasion, and the burden of proof is borne by the tax authorities. However, the principle of fault attribution has not been strictly implemented by the grassroots tax authorities, and in practice, this controversial issue has not been resolved, resulting in a large number of taxpayers without subjective fault being recognized as tax evasion.

We are concerned that the 2015 version of the revised draft has responded to this issue, which is an important manifestation of the progress of the rule of law. Although it does not specify the subjective intent element in Article 97 on tax evasion, it adds the "subjective negligence element" in Article 99, i.e., "where a taxpayer ...... negligently violates tax laws or administrative regulations, resulting in the non-payment or underpayment of tax", it is not recognized as tax evasion. If a taxpayer violates tax laws or administrative regulations through negligence, resulting in unpaid or underpaid tax," it is not recognized as tax evasion. Accordingly, it can be concluded that the application of Article 99 requires proof of the existence of subjective negligence of the taxpayer and the burden of proof is borne by the tax authorities, which can be reversed by applying the tax evasion provisions of Article 97 requires proof of the existence of subjective intent of the taxpayer and the burden of proof is borne by the tax authorities. Although the 2015 version of the revised draft was abandoned, the progressive light of this article should be continued in this Exposure Draft.

However, Article 73 of the 2025 Revision does not specify the "subjective intent element" and Article 74 does not specify the "subjective negligence element", which is still an objective attribution of responsibility, and is inconsistent with the spirit of civilized law enforcement that the SAT has always advocated. This is still an objective approach to attribute responsibility, which is inconsistent with the spirit of civilized law enforcement consistently advocated by SAT. This problem is more obvious in the determination of "non-declaration" type of tax evasion behavior.2025 Article 73 of the revised draft of the Tax Administration Law stipulates that the "non-declaration" type of tax evasion behavior is stipulated in Article 73(1)(4) and (5), which specifies that the registered taxpayers are required to submit a tax return to the State Administration of Taxation. It is clear that tax evasion constitutes tax evasion as long as a registered taxpayer fails to declare the taxable act without considering any subjective state, and tax evasion constitutes tax evasion only if a taxpayer without registration fails to declare the taxable act after notification by the tax authorities. Due to the lack of examination of subjective state, taxpayers without registration have an additional pre-procedure compared with taxpayers with registration, which creates the problem of The paradox of "registration is risky". Such a provision will create an undesirable guidance for market players, forcing them to choose not to register and avoid the risk of tax evasion. We are also concerned that Article 18 of the Exposure Draft of the Revision of the Tax Administration Law of 2025 stipulates that taxpayers shall be informed by the market supervision and administration department and other registration authorities of relevant matters such as filing tax returns in accordance with the law during the registration process of the establishment of taxpayers, but this stipulation is more principled and generalized, and does not require that the tax authorities provide taxpayers with detailed and specific tax counseling, which obviously does not lead to the conclusion that Obviously, it cannot be concluded that "informing means that one should know". Taxpayers may still fail to file tax returns in accordance with the law due to misunderstanding of the tax law and trust in the tax authorities' erroneous enforcement behavior. It is unreasonable to conclude that failure to file a tax return constitutes tax evasion.

In our view, the root cause of this problem is that article 73 of the draft tax administration law of 2025 basically refers to the "non-declaration" provision of the "Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Administration" in the connection with the implementation of the criminal law, but fails to take into account the hidden elements of the crime. According to the basic principles of criminal law, to determine that the perpetrator constitutes a crime, it is necessary to follow the principle of subjective-objective consistency, and the subjective element is one of the indispensable elements for constituting a crime. Specifically for the crime of tax evasion, since the Criminal Law does not explicitly stipulate that it is a negligent crime, it clearly belongs to the intentional crime. Although the Criminal Law does not explicitly stipulate that only "willful tax evasion" constitutes the crime of tax evasion, it is self-evident that willful tax evasion is a constituent element of the crime of tax evasion. However, in the process of referring to the relevant provisions of the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Hazardous Tax Collection and Administration of Taxes in the draft revision of the Tax Collection and Administration Law of 2025, the draft cites only the explicitly stipulated constituent elements and ignores the subjective elements omitted from the Criminal Law, leading to the lack of subjective elements in the stipulation of tax evasion in Article 73, which leads to the inappropriate result of objective attribution of responsibility.

As a matter of fact, Article 33(2) of the Administrative Penalty Law as amended in 2021 stipulates that "If the party concerned has evidence sufficient to prove that there is no subjective fault, no administrative penalty shall be imposed. Where laws and administrative regulations provide otherwise, the provisions shall apply", this article is the first time in the field of administrative penalties to clearly examine the subjective state of the parties, and to determine that tax evasion triggers the legal liability of administrative penalties, and of course, the subjective state of the perpetrator must also be examined. Although the Law on Administrative Penalties stipulates the general principle of presumption of fault, it also stipulates the exception clause. We believe that the Tax Administration Law has already given the tax authorities great authority to conduct tax inspections, and the tax authorities are already in a very strong position. In the field of tax administration, the exceptions of the Administrative Penalty Law should be applied, and the strict principle of fault should be applied, so as to make it clear that the tax authorities should bear the burden of proof that the taxpayers are subjectively at fault.

Therefore, we suggest that the subjective element be clarified in the "non-declaration" category of tax evasion, which is in line with the spirit of the relevant approvals of the State Administration of Taxation and the basic principles of the Administrative Penalty Law:

First, in Article 73 of the Exposure Draft, the first paragraph shall be changed to read "A taxpayer adopts the following means to make a false tax declaration or intentionally fails to make a declaration", and the fourth item of the first paragraph shall be changed to read "A taxpayer who has already applied for registration of establishment, who has committed a taxable act and is liable to a large amount of tax, but intentionally fails to declare it. ", and paragraph 1 (5) to "taxpayers who have not registered for establishment in accordance with the law, or taxpayers who do not need to register for establishment in accordance with the law, and the taxable amount of taxpayers who have notified the tax authorities to declare and refused to do so".

Secondly, in Article 74 of the Exposure Draft, the element of negligence shall be added, and the Article shall be amended to read as follows: "If a taxpayer or a withholding agent fails to make a declaration in accordance with the regulations due to negligence, which results in non-payment or underpayment of tax, the tax authorities shall recover the unpaid or underpaid tax and the tax penalty for non-payment or underpayment; if the circumstances are serious, a fine of less than 50% of the unpaid or underpaid tax may be imposed; if the circumstances are serious, a fine of more than 50% and less than twice the unpaid or underpaid tax shall be imposed. If the circumstances are aggravated, the taxpayer or withholding agent may be fined less than 50% of the unpaid or underpaid tax; if the circumstances are aggravated, the taxpayer or withholding agent shall be fined at least 50% and more than twice the amount of the unpaid or underpaid tax".

In addition, we are of the view that among the tax evasion behaviors stipulated in the Exposure Draft under the category of "false tax declaration", the expression "transfer" of income and property in paragraph 1 (b) of Article 73 is not appropriate. Other acts of false tax declaration adopt the expressions of "forgery", "alteration", "concealment", "falsification", "forgery", "falsification", "falsification" and "falsification". "Counterfeiting", "illegal deletion", "fabrication of false tax basis" and other expressions, it is not difficult to find that the law provides for these tax evasion behavior itself can reflect the subjective fault of the taxpayer. However, "transfer" is a neutral concept that does not involve value judgment, and the subjective fault cannot be determined from the expression "transfer"; therefore, we suggest that "transfer" be deleted.

(xix) Increase the penalty provisions for false invoicing offenses, and raise the fine to 5 million yuan

Currently, the definition and penalty provisions of false invoicing are found in Article 21 and Article 35 of the Measures for the Administration of Invoices, which are administrative regulations formulated by the State Council.2025 The first paragraph of Article 83 of Chapter 5 of the Revised Draft of the Tax Administration Law for Solicitation of Opinions incorporates the definition and penalty provisions of false invoicing and raises the upper limit of the penalties, which provides a higher level of legal source to combat false invoicing and increases the penalty for false invoicing. provides a higher-order legal source and increases the efforts to combat false invoicing.

However, it should be emphasized that the improvement of the legal status of the administrative penalty for false invoicing is not equal to the lowering of the criminalization standard. The criminal circle of false invoicing is inevitably smaller than the circle of administrative violations of false invoicing, and the case-handling authorities should correctly understand the differences between administrative violations of false invoicing and criminal offenses, and punish false invoicing violations in accordance with the law, and accurately combat false invoicing offenses, specifically:

On the one hand, an act that constitutes false invoicing in administrative law does not necessarily constitute false invoicing in criminal law.2025 The Exposure Draft of the Revision of the Law on Tax Collection and Administration stipulates that issuing invoices that do not correspond to the actual business situation constitutes false invoicing in administrative law, but Paragraph 1 of Article 10 of the Interpretation on Several Issues on the Application of Law in Handling Criminal Cases of Hazardous Tax Collection and Administration restricts the act of falsely invoicing VAT special purpose invoices to "However, Paragraph 1 of Article 10 of the Interpretation on Several Issues on the Application of Laws on Handling Criminal Cases of Hazardous Tax Administration limits the behavior of false invoicing of VAT to four categories, namely, "false invoicing without goods," "high invoicing with goods," "false invoicing with fictitious transaction subject," and "falsification of electronic information. The scope is smaller than the behavior of false invoicing in administrative law. In addition, according to Paragraph 2 of Article 10 of the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Administration, "If the purpose of the fraudulent increase of performance, financing, loan, etc. is not to fraudulently offset the tax, and if there is no fraudulent loss of tax due to the offset, it shall not be punished as this crime, and if it constitutes other crimes, it shall be investigated as other crimes in accordance with the law for the criminal responsibility". . That is to say, if the perpetrator constitutes the act of false invoicing in the criminal law, the perpetrator should be further considered whether the perpetrator has the purpose of fraudulently offsetting taxes and whether it has caused fraudulent loss of taxes, such as the purpose of the perpetrator's false invoicing is to falsely increase the performance, to handle the loan, etc., and the false invoicing act has not caused fraudulent loss of taxes, then it does not constitute the crime of false opening of VAT invoices, and the authorities in charge of the case can not take the false opening of administrative law as the false invoicing in the criminal law. The case-handling authorities cannot treat all false openings in administrative law as false openings in criminal law to combat the crime.

On the other hand, if an act does not even constitute false opening in administrative law, it must not constitute false opening in criminal law. For example, in the renewable resources industry, according to the Approval of the State Administration of Taxation on the Taxation Issues Related to the Business of Recycling of Waste Materials (Guo Shui Han [2002] No. 893), the acquisition of waste materials will be transported by waste material purchasers directly to the manufacturers, and the waste material management unit will do the purchase and sale processing in the finance and issue invoices to the manufacturers according to the business of the waste material purchasers and the manufacturers, which do not constitute a false invoicing,. This belongs to the typical opening mode. Under this model, the purchase and sale relationship occurs between the waste materials buyers and manufacturers, waste materials management unit is not involved in the purchase and sale relationship between them, its invoicing is essentially on behalf of the waste materials buyers to the manufacturers of invoices, the "State Administration of Taxation on the recycling of waste materials on the business of the tax issues related to the approval of the reply" clearly stipulates that this kind of invoicing is not a false invoicing, and should not be characterized as a waste material Operating units and manufacturers constitute the crime of false invoicing.

(xx) Elimination of the pre-review tax clearance provision and establishment of the rule of review followed by payment of tax before litigation

The first paragraph of Article 101 of Chapter 5 of the Revised Draft of the Tax Administration Law of 2025 abolishes the provision of "tax clearance prior" for administrative reconsideration, and transfers the requirement of "tax clearance prior" from administrative reconsideration to administrative litigation, so that when a dispute arises between the parties and the tax authorities on tax payment, the parties can apply for administrative reconsideration directly. In case of disputes between the parties and the tax authorities on tax payment, the parties can directly apply for administrative reconsideration and no longer require to pay tax or provide guarantee, which is consistent with the provisions of the Customs Tariff Law that has just been promulgated, greatly reducing the cost of the parties to protect their rights, and is a significant progress in the legislation.

At the same time, the author suggests that full consideration should be given to the convergence of the tax guarantee period and the prosecution period. According to Article 45 of the Administrative Procedure Law, the deadline for prosecution after reconsideration is only fifteen days. However, in practice, the time for processing the tax guarantee is usually longer and may far exceed fifteen days, which may exceed the prosecution period of administrative litigation. Therefore, we suggest that the provision on the suspension of the prosecution period should be added, and that "the period for processing the tax guarantee shall not be counted as part of the prosecution period" should be added after paragraph 1 of Article 101.

(xxi) The Internet e-commerce sector is no longer an extralegal area for tax collection and management.

The 2025 Revised Exposure Draft of the Tax Administration Law comprehensively adds new provisions related to e-commerce platforms, stipulates the information reporting obligations of e-commerce platforms, realizes the convergence with the E-Commerce Law, and at the same time, newly establishes the obligations of e-commerce platforms to handle tax-related matters, such as tax declarations, and refines the penalties for violating the obligations. However, we believe that there is still room for further improvement in the current provisions.

First of all, the first paragraph of Article 29 of the revised draft of the Tax Administration Law of 2025 directly quotes the concept of e-commerce platform operators in the E-commerce Law, which matches the provisions of the E-commerce Law. The second paragraph creates the concept of "other network trading platform operators" and gives e-commerce platform operators the same reporting obligations, but "other network trading platform operators" is not defined in the E-Commerce Law or other laws and regulations, and the concept is vague. However, "other online trading platform operators" is not defined in the E-Commerce Law or other laws and regulations, and the concept of "other online trading platform operators" is ambiguous, which will pose a hidden problem for the uniformity of law enforcement.

Secondly, the third paragraph of Article 29 further upgrades the responsibility of the platform by adding the obligation to "handle tax declaration and other relevant tax-related matters" on the basis of the obligation to report information, aiming to strengthen the control of tax sources through the centralized declaration mechanism of the platform, and essentially promoting the transformation of the platform from an information intermediary to the main body of the common governance of taxation. However, the provisions of the draft Tax Administration Law of 2025 are relatively simple, without specifying the scope of taxes to be handled by the platform, clearly defining the attributes of the platform's role, and it is not clear whether the platform adopts the mode of filing tax returns on behalf of the operator or withholding and paying tax on behalf of the operator, which is in urgent need of further refinement. In addition, the contradiction between the centralized declaration mode of platforms and the decentralized registration places of operators may exacerbate inter-regional tax competition. For example, when an e-commerce platform in a certain region declares the taxes of sellers across the country, if the tax revenue is attributed according to the principle of the platform's place of registration, it will change the existing pattern of distribution of tax sources, resulting in the loss of tax sources in other regions and causing tax unfairness.

Finally, the new penalty provision for e-commerce platform enterprises in Article 72 of the draft Tax Administration Law of 2025 shows an escalation of regulatory efforts and a lack of institutional refinement. This adjustment adds a "particularly serious" level to the original penalty framework of the E-commerce Law and raises the penalty ceiling to 2 million yuan, aiming to strengthen the deterrent effect on platforms. At the same time, for failure to fulfill the obligation to assist in tax declaration, the base amount of the fine is directly linked to the amount of tax-related violations, reflecting the logic of penalizing the cost of violation of the law and the consequences of harm.

However, while this amendment strengthens regulation, it also has a number of institutional shortcomings. The first problem is that the addition of the "particularly serious circumstances" level will lead to legislative contradictions. Article 80 of the E-Commerce Law stipulates that the maximum penalty for platforms violating the obligation to report information is 500,000 yuan, while the upper limit of the 2025 Tax Administration Law revision draft is 2 million yuan, although there is a provision that "laws and administrative regulations on the penalty for the offenses stipulated in the preceding paragraph are otherwise provided for, in accordance with its provisions," but still will be Although there is a provision that "laws and administrative regulations provide for other penalties for the offenses stipulated in the preceding paragraph in accordance with their provisions", it will still bring the problem of inconsistency in the standard of penalties for the same offense in different laws. In addition, the lack of criteria for determining "aggravating circumstances" and "particularly serious circumstances", and the wide range of "particularly serious circumstances" will lead to too much room for administrative discretion.

The deep impact of this amendment is to promote the economic tax governance of Internet platforms from passive supervision to active control, and all individual operators and business operators within Internet platforms will be mandatorily included in the levy control network in the future. By virtue of the transparency of e-commerce platform data, tax authorities can directly obtain real-time data such as platform transaction flow and commission share, which will significantly improve the accuracy of identifying illegal behaviors such as hidden income and false invoicing, so that e-commerce platform operators will have no way to hide from the commonly used tax evasion tricks.

Conclusion: The Tax Administration Law is the basic law of tax procedure in China, which regulates the mutual relationship between tax authorities and taxpayers, and has the closest connection with the public in the field of all administrative law departments, and it should play an exemplary role in practicing the basic concepts of modern civilization of the rule of law, with the goal of constructing a modern system of tax collection and revenue collection, and implementing the basic principles of ruling taxes according to the law, taxpayers' rights and interests protection, and common governance of taxes, and promoting the establishment of The 2025 Revision Draft follows the three basic principles of unification of the rule of law and reform, unification of innovation and righteousness, and unification of protection of taxpayers' legitimate rights and interests and standardization of tax law enforcement, which is a better embodiment of the rule of tax by law and good governance, and adapts to the needs of the practice of tax collection and management in the new era. We expect the finance and taxation department of the State Council to collect opinions and suggestions from all sectors of the society, uphold the spirit of professional and scientific legislation, further adjust and improve the relevant provisions, and submit it to the Standing Committee of the National People's Congress for deliberation. It is expected that the draft revision of the Tax Administration Law will be considered and passed by the 14th NPC Standing Committee before 2027!