Editor’s Note: On August 31, 2026, the State Council Executive Meeting discussed and “approved in principle” the “Draft Amendment to the Tax Collection and Administration Law,” deciding to submit the draft to the Standing Committee of the National People’s Congress for deliberation.From the release of the draft for public comment in March 2025, through the numerous controversies and suggestions raised by various sectors of society, to the State Council’s decision to “approve in principle”—what does this phrasing imply? Have the previously controversial provisions been adopted? What stages will follow? This article will analyze the logic and direction behind this legislative process.

 01 Release of the Draft for Public Comment and Intense Feedback from All Sectors of Society 

 On March 28, 2025, the State Taxation Administration released the “Draft Amendment to the Tax Collection and Administration Law” and accompanying explanatory notes, soliciting public comments. This marks another major revision 24 years after the comprehensive revision in 2001.The current “Tax Collection and Administration Law” was enacted and promulgated by the Standing Committee of the Seventh National People’s Congress in September 1992 and took effect on January 1, 1993. It has undergone four revisions in 1995, 2001, 2013, and 2015. Of these, only the 2001 revision was a comprehensive overhaul, which significantly advanced concepts such as tax administration in accordance with the law and the protection of taxpayers’ rights; the other three were minor amendments.Although the 2025 revision draft is less innovative than the 2015 draft, it still introduces many significant changes.

 Regarding taxpayer identification numbers and tax registration, the Unified Social Credit Code and the citizen ID number will be used as the tax identifiers for enterprises and natural persons, respectively. Enterprises will automatically receive an identification number upon establishment, and the business license will serve directly as the tax registration certificate, eliminating the need for a separate registration procedure.Regarding the sharing of tax-related information, a cross-departmental mechanism for the provision and sharing of tax information has been established. This grants tax authorities the statutory authority to request tax information from departments such as public security, financial management, and customs, and imposes a statutory obligation on these relevant departments to cooperate. Additionally, natural persons have been included within the scope of entities required to report tax information.Regarding anti-tax avoidance and tax administration measures, tax adjustments for anti-tax avoidance purposes will be expanded from related-party transactions to non-related-party transactions, and from enterprises to individuals. Tax authorities will be able to enforce the seizure of funds in taxpayers’ accounts on third-party payment platforms such as Alipay and WeChat, and the doctrine of piercing the corporate veil will be introduced, allowing tax authorities to directly collect taxes from shareholders.In terms of procedural improvements, the provision requiring tax clearance prior to administrative reconsideration has been abolished, and a rule establishing a sequence of “administrative reconsideration first, tax payment second, and litigation last” has been established. The term “tax evasion” has been replaced with “tax avoidance” to align with the Criminal Law. Additionally, legal grounds have been provided for electronic vouchers such as digital invoices, and it has been clarified that tax authorities may utilize big data analysis to assess tax risks.

 However, several provisions in the draft amendment have also sparked intense debate across various sectors. First, the change from “tax evasion” to “tax avoidance” fails to reflect the principle of consistency between subjective intent and objective conduct. The draft replaces “tax evasion” with “tax avoidance” to align with the Criminal Law and judicial interpretations issued by the Supreme People’s Court and the Supreme People’s Procuratorate, but it does not explicitly emphasize the requirement of subjective intent.Inaccurate reporting resulting from negligence should be distinguished in nature from intentional tax evasion; the lack of a clear requirement for subjective intent may lead to the two being treated as equivalent. In particular, regarding “failure to file” tax evasion, the provision states that any registered taxpayer who fails to file a tax return is deemed to have committed tax evasion, regardless of their subjective state of mind. This provision has been criticized as creating the paradox that “registration itself carries risk.”Second, while the term “late payment penalty” has been changed to “delayed payment penalty,” no upper limit has been established. The daily collection rate of 0.05% (annualized at 18.25%) and the model of indefinite collection remain unchanged. The name change does not alter the legal substance; its punitive nature cannot escape the restriction in Article 45 of the Administrative Compulsory Law, which stipulates that late payment penalties shall not exceed the principal amount. In cases of long-term tax arrears, this may give rise to disputes regarding the principle of proportionality. Third, the definition of platform liability is unclear.The draft requires platforms to file tax returns, imposing an excessive duty of cooperation on e-commerce platforms. The newly created concept of “other online transaction platform operators” has a vague scope, and the conflict between the centralized platform filing model and the dispersed registration locations of operators may also intensify interregional tax competition. Fourth, tax inspection powers have expanded comprehensively, raising concerns about the protection of taxpayers’ rights.Tax authorities may utilize big data for risk analysis, significantly broadening the scope of audits; new evidence-gathering measures—including seizure, impoundment, and forensic examination—have been added; and restrictions on leaving the country have been moved from the tax arrears stage to the case investigation phase. The balance between the expansion of authority and the protection of personal information has also become a focal point of discussion. The above controversies vividly reflect the concerns and expectations of all sectors of society regarding the draft amendment.

 02 Understanding the State Council Executive Meeting’s “Discussion and Approval in Principle”

 On August 31, 2026, the State Council Executive Meeting discussed and approved in principle the “Draft Amendment to the Tax Collection and Administration Law.” This raises the question: Have the numerous controversies and opinions previously raised by various sectors of society been adopted by the State Council? Have the comments collected by the Ministry of Finance and the State Taxation Administration been translated into specific amendments to the provisions?

 A review of publicly available information on the State Council Executive Meeting’s deliberations of draft laws reveals that “approved in principle” is one of the more commonly used phrases when the State Council reviews draft laws; most draft laws submitted by the State Council to the Standing Committee of the National People’s Congress for deliberation are finalized at the State Council level in this manner. Of course, there are exceptions; for example, on January 4, 2021, the State Council Executive Meeting stated that “the meeting adopted the ‘Draft Stamp Tax Law of the People’s Republic of China.’”The Stamp Tax Law falls under “carry-over” legislation, aimed at elevating mature and stable provisional regulations to the status of law, with the overall framework and tax burden remaining largely unchanged. In contrast, the Tax Administration Law constitutes “comprehensive revision” legislation, involving broad and profound institutional reforms; therefore, the use of “approved in principle” is a more prudent approach.

 After a draft law is discussed and approved at a State Council executive meeting, it must still be signed by the Premier of the State Council as a legislative proposal and submitted to the Standing Committee of the National People’s Congress for deliberation. In other words, while the State Council endorses the framework, rationale, and spirit of the amendment draft, there remains room for further refinement of specific provisions and details during subsequent legislative procedures. The specific handling of these issues will only become clear once the full text of the amendment draft is made public during the deliberation stage by the Standing Committee of the National People’s Congress.

 03 Full Text of the Amendment Draft Expected to Be Released After First Reading by the Standing Committee of the National People’s Congress

 The State Council’s approval in principle of the draft amendment and its submission to the Standing Committee of the National People’s Congress for deliberation mark a key stage in the formal legislative process for amending the Tax Collection and Administration Law. According to Article 32 of the Legislation Law, a bill included on the agenda of the Standing Committee generally must undergo three deliberations by the Standing Committee before being put to a vote.Article 33 stipulates that where opinions from all sides are relatively consistent, a bill may be put to a vote after two deliberations by the Standing Committee; bills involving relatively simple adjustments or partial amendments may also be put to a vote after a single deliberation by the Standing Committee.

 This revision of the Tax Collection and Administration Law is quite extensive. More than 25 years have passed since the last revision in 2001, during which time the economy and society have undergone tremendous changes. The revision addresses numerous issues and concerns the vital interests of a wide range of market entities as well as economic and social development; it is highly likely that it will require three readings before being put to a vote.According to legislative practice, the first reading focuses on reviewing the necessity and feasibility of enacting the law, as well as the reasonableness of its legal framework and structure; the second reading focuses on reviewing whether the provisions on several key issues in the second draft of the bill are appropriate and feasible; and the third reading focuses on reviewing whether the opinions raised by various parties on several key issues have been properly addressed, and whether there are sufficient and reasonable explanations and justifications for any opinions that were not adopted.

 So, when will the public be able to view the publicly released text of the amendment draft? The practice of soliciting public comments on draft laws has long been institutionalized. In April 2008, the Presidium of the Standing Committee of the National People’s Congress decided that, in principle, all draft laws deliberated by the Standing Committee should be published on the website of the National People’s Congress; in December 2015, the Presidium adopted the “Regulations on the Publication of Draft Laws to the Public for Soliciting Comments”;Article 40 of the “Law on Legislation,” as amended in 2023, further stipulates that for bills included on the agenda of the Standing Committee’s meetings, the draft and related explanatory notes on its drafting and amendments shall be published to the public for comment after the meeting, unless the Presidium decides otherwise. The period for soliciting public comments shall generally be no less than thirty days. The results of the public consultation shall be reported to the public.

 In practice, most draft laws are made public for public comment after both the first and second readings. For example, the Ninth Amendment to the Criminal Law was made public for comment after its initial review in 2014, and the second-reading draft was again made public for comment in 2015; the draft Value-Added Tax Law was made public for comment after its first reading in December 2022, and the second-reading draft was again made public for comment in September 2023;the draft Financial Stability Law was similarly made available for public comment following its first reading in December 2022, and the second-reading draft was again made available for public comment in June 2024.Following this precedent, the public can expect to see the full text of the amendment draft submitted by the State Council after the Standing Committee of the National People’s Congress conducts its first review. At that time, the differences between the draft and the March 2025 consultation draft will precisely reflect the revisions and adjustments made by the State Council after taking into account opinions from all parties. If controversial provisions have been substantially amended, these changes will be reflected in this version.

 04 Conclusion

 As a fundamental law governing tax collection and payment, the Tax Collection and Administration Law serves as a crucial legal safeguard for the effective functioning of the tax system. During its deliberations, the Executive Meeting of the State Council emphasized the need to organize tax collection and administration in accordance with the law, standardize tax enforcement practices, focus on optimizing taxpayer services, strengthen the protection of taxpayers’ legitimate rights and interests, and continuously promote tax burden equity and improve fiscal and tax governance. This statement clarifies the core direction of this revision, emphasizing both law-based tax administration and standardized enforcement, as well as the protection of taxpayers’ rights and tax burden equity.It is hoped that during the deliberations of the draft amendment by the Standing Committee of the National People’s Congress, the aforementioned contentious issues will be further clarified, ensuring that this important law—which concerns every taxpayer—will stand the test of practice and time.

 Proceeding in tandem with the revision of the Tax Administration Law is a recent flurry of new regulations in the tax sector. Regarding value-added tax (VAT), matters such as non-taxable transactions have been clarified, and administrative measures have been introduced for domestic entities to withhold and remit VAT on behalf of individuals. Regarding individual income tax, administrative regulations have been issued for scenarios such as offshore trusts, dividends and bonuses received by foreign individuals, and the transfer of restricted shares in listed companies. Regarding corporate income tax, the filing and record-keeping requirements for special tax treatments in corporate reorganizations have been optimized.In addition, a draft for public comment on the rules for tax administrative reconsideration has been released. These rules address different tax types and stages of tax administration, working in concert with the amendments to the Tax Administration Law to jointly advance the continuous deepening of the rule of law in taxation.