Generally speaking, investment promotion refers to the activities of local governments in using external resources to promote regional economic development, which is of great significance in promoting local employment, optimizing local industrial structure and expanding the scale of economic development. For a long time, giving tax concessions and financial rebates to investing enterprises is a common way for local governments to attract investment, and this kind of financial and tax incentives can help alleviate the pressure on the capital turnover of investing enterprises, reduce operating costs, stimulate development vitality, and boost the development of the regional economy.

For a long time, due to the tax predicament of the industry, the business chain of renewable resources, logistics and transportation, and flexible labor and other industries generally has a link that operates on the basis of local fiscal and tax incentives, and the approved levy policy in some regions has also become an important consideration in the design of enterprise equity structure and tax-saving arrangements for high net-worth individuals. However, in practice, some regions have violated the law by granting preferential fiscal and tax policies to investment enterprises, forming “involutional” competition in investment promotion and destroying fair competition in the market, while some enterprises have caused problems such as false opening and tax evasion in the process of applying the policies, which is detrimental to the construction of a good business environment. In order to build a unified national market and optimize the business environment, in recent years, the clean-up and standardization of tax and other preferential actions have been carried out in an orderly manner, and the local illegal “tax incentives” have been gradually contracted, and replaced by “financial rebates” and other financial payments to become the main investment promotion In July 2024, the Third Plenary Session of the 20th CPC Central Committee adopted the “Decision of the CPC Central Committee on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization”, which clearly states that to “standardize local investment promotion regulations and systems, and strictly prohibit illegal and irregular policy concessions,” setting the tone for regulating local investment promotion behavior; on August 1, 2024, the Regulations on Fair Competition Review came into force, making it clear that “policies and measures drafted by the drafting unit shall not contain laws, administrative regulations, or without the approval of the State Council, and shall not be based on the laws, administrative regulations, or without the approval of the State Council. basis or without the approval of the State Council, shall not contain the following content affecting the cost of production and operation: (a) granting tax preferences to specific operators; (b) granting selective and differentiated financial incentives or subsidies to specific operators”, and pointed out to carry out regular clean-up actions; since 2024, the Audit Commission, the General Administration of Taxation, the Development and Reform Commission and other departments have issued documents to explicitly investigate irregularities in the process of attracting investment. The issue of illegal tax rebates in the process of investment promotion has been clearly investigated, and many places have also carried out cleanup actions for illegal tax rebates. At the same time, with the normalization of the eight departments' joint actions to rectify fraudulent tax evasion and the comprehensive advancement of tax collection and management informatization and digitization, industries and fields relying on financial rebates are facing a severe tax supervision situation.

In the cases of false opening and tax evasion involving investment promotion and taxation policies that have broken out so far, local government officials, investment promotion platforms and investment enterprises are facing different degrees of legal liabilities. Hwuason Law Firm combines its continuous research in the field of investment promotion and its experience in representing tax-related cases to write this report, selects the latest typical cases, and conducts in-depth analysis on the tax environment of investment promotion under the new situation of tax collection and management, the business model of investment enterprises, the tax-related legal risks of each subject, and the management of tax compliance, etc., with a view to providing useful references and reference for the local government, investment promotion platforms, and investment enterprises.

This report is divided into seven sections, and the full text is about 23,000 words.

Click to download:《Investment Promotion Tax Compliance Report》（2025）