Editor's Note: Where the issuer and recipient of VAT special invoices fall under the jurisdiction of tax authorities in different regions, the tax authority at the issuer's location, after determining that the issuer falsely issued invoices, will often send a Notice of Confirmed False Invoicing to the tax authority at the recipient's location, or directly issue a Tax Treatment Decision against the issuer finding false invoicing. The recipient's local tax authority may then require the recipient enterprise to reverse input VAT credits, pay additional tax, and undergo an investigation. May the recipient enterprise directly apply for administrative reconsideration of either document issued by the issuer's tax authority? Two rulings delivered by the same collegial panel of the Liaoning High People's Court reached different conclusions, and one was later selected as a typical case by the Supreme People's Court. Drawing on these two cases, this article analyzes the rules governing whether each type of document is subject to administrative reconsideration and offers practical response strategies.

Editor's Note: On July 24, 2026, the Ministry of Finance and the State Taxation Administration issued the "Announcement of the Ministry of Finance and the State Taxation Administration on Individual Income Tax Matters Concerning Offshore Trusts" (Announcement No. 21 [2026] of the Ministry of Finance and the State Taxation Administration), together with the supporting "Announcement of the State Taxation Administration on Collection and Administration Matters Concerning Individual Income Tax on Offshore Trusts" (Announcement No. 15 [2026] of the State Taxation Administration). Based on the principle of substance over form, these announcements establish that the settlor of an offshore trust is, in principle, the taxpayer liable for individual income tax, that the trustee bears the ancillary obligation to assist in tax return filing, and establish four major anti-avoidance rules, marking a new stage in individual income tax supervision. This article aims to analyze the core concepts established by the new rules, remind high-net-worth individuals to seize the 90-day compliance window period, and, in light of practical analysis, discuss potential disputes and impacts of the rules for readers' reference.

Editor’s Note:
The State Taxation Administration recently issued the Announcement on Tax Collection and Administration Matters Concerning the Enterprise Income Tax Treatment of Corporate Restructuring Transactions (State Taxation Administration Announcement No. 13 of 2026). The Announcement clarifies that, in a corporate merger or division, the portion satisfying the prescribed conditions may qualify for special tax treatment, while the remaining portion is subject to general tax treatment. This enables the two forms of tax treatment to be applied concurrently within the same restructuring transaction. Against the backdrop of an overview of the evolution of China’s corporate restructuring tax policies, this article focuses on the key rules introduced by Announcement No. 13 and provides recommendations for their compliant application.

Editor's Note: In July 2012, the State Taxation Administration (STA) issued the Guiding Opinions of the State Taxation Administration on Regulating the Exercise of Tax Administrative Discretion (Guo Shui Fa [2012] No. 65), requiring provincial tax authorities to establish, in principle, a system of tax discretion benchmarks. In November 2016, the STA further issued the "Rules for the Exercise of Tax Administrative Penalty Discretion", which explicitly required provincial tax authorities to jointly formulate unified tax administrative penalty discretion benchmarks applicable within their respective jurisdictions, and set out clear provisions on the formulation of such benchmarks and the application of the rules. In recent years, regions such as Northeast China and Southwest China have successively issued tax administrative penalty discretion benchmarks, unifying the standards of tax law enforcement within their regions. However, there remains a lack of unified rules at the national level. To improve the system of administrative discretion benchmarks and promote the integration of national tax law enforcement standards, the STA has drafted the "Announcement of the State Taxation Administration on Promulgating the Administrative Penalty Discretion Benchmark (2026 Edition) (Exposure Draft)" (hereinafter referred to as the "Discretion Benchmark") and is soliciting public comments. Based on a summary of the highlights of the Discretion Benchmark and combined with practical experience, this article proposes targeted revisions.

Editor’s Note:China’s road transportation industry continues to rely heavily on individual drivers and self-employed operators as the principal carriers that actually perform transportation services. In practice, transportation enterprises acting as intermediaries in the transportation chain are often unable to obtain invoices from individual drivers. At the same time, they are required to issue transportation service invoices to consignors. This mismatch—output VAT invoices without corresponding input VAT invoices—can result in a substantial tax burden. In recent years, new business models have emerged, including asset-light carrier operations conducted through online freight platforms. However, deficiencies such as non-standardized business processes and inadequate tax compliance systems have contributed to frequent cases involving the fraudulent issuance of invoices. By examining the principal invoice-related tax risks in the transportation industry, this article provides corresponding compliance recommendations for transportation enterprises.

-

Editor's Note: In June 2026, the Inspection Bureau of the Hami Municipal Tax Service served by public notice a Decision on Tax Treatment (Hami Tax Inspection Treatment [2026] No. 21) and a Decision Not to Impose a Tax Administrative Penalty (Hami Tax Inspection No-Penalty [2026] No. 3). The logistics company involved had obtained falsely issued special VAT invoices and claimed input VAT credits. Its VAT and urban maintenance and construction tax underpayments were characterized as tax evasion, but no penalty was imposed because the five-year limitation period for penalties had expired. As for enterprise income tax, because the company's books and records were missing and an audit-based determination was impossible, the Inspection Bureau assessed the tax payable by estimation; it neither characterized the matter as tax evasion nor imposed a fine. Taking this case as its starting point, this article analyzes why tax assessed by estimation should not serve as the basis for either a finding of tax evasion or the calculation of a penalty. It also discusses the separate application of the tax recovery period and the limitation period for penalties, as well as the availability of tax incentives for small low-profit enterprises under assessment by estimation, with a view to providing guidance to relevant market participants.

Recently, the State Taxation Administration disclosed a case involving an individual proprietorship that engaged in "escape-style" cancellation. The actual controller of this individual proprietorship concealed operating income of RMB 207 million from the entity's business activities and subsequently evaded tax obligations by completing deregistration. The tax authority characterized such conduct as tax evasion and issued a decision to recover the tax underpaid, impose late payment surcharges and impose penalties against the actual controller. In practice, there are also numerous instances where legal persons (e.g., limited liability companies) and unincorporated organizations (e.g., partnerships) evade tax obligations through means such as submitting false materials for deregistration, and tax authorities pursue tax recovery from individual shareholders of dissolved companies or partners of dissolved partnerships. Under such circumstances, can tax authorities directly pierce through the business entity and pursue tax liabilities against natural persons? This article intends to analyze different types of business entities for readers' reference.