Editor's Note: On November 6, 2026, the website of the National People's Congress published the full text of the Tax Collection and Administration Law (Draft Amendment) to solicit public comments. For ease of distinction, this article refers to the currently effective Tax Collection and Administration Law as the "Current Law", and to the Tax Collection and Administration Law (Draft Amendment for Public Comment) published by the State Taxation Administration and the Ministry of Finance in March 2025 as the "Draft for Comment". The Draft Amendment consists of 6 chapters and 100 articles, and makes significant adjustments to law enforcement standards, the characterization of tax evasion, late payment surcharges, compulsory measures, and remedy procedures, among other matters. Taking the Current Law as the baseline and conducting a comparison in conjunction with the Draft for Comment, the Hwuason lawyers' team has identified eight highlights of the Draft Amendment and put forward five recommendations for improvement in respect of provisions that still require refinement, for readers' reference and discussion.

I. Overall Framework of the Draft Amendment to the Tax Collection and Administration Law

The Current Law was enacted in 1992 and comprehensively revised in 2001, with individual provisions amended in 1995, 2013 and 2015 respectively; it consists of 6 chapters and 94 articles. According to the explanatory notes to the Draft Amendment, in recent years, as new business forms and new models have continued to emerge, problems such as the inadequacy of the Current Law's collection and administration measures and the insufficient protection of taxpayers' lawful rights and interests have become increasingly prominent, and the measures and practices that have proven effective in collection and administration reform likewise need to be elevated into legal institutions. On the basis of the public consultation on the Draft for Comment, the State Taxation Administration and the Ministry of Finance drafted a Draft for Submission for Review; the Ministry of Justice twice solicited opinions from 89 entities and, together with the State Taxation Administration and the Ministry of Finance, revised and formed the Draft Amendment; following discussion and approval at an executive meeting of the State Council, it was submitted on November 2, 2026 to the 25th session of the Standing Committee of the 14th National People's Congress for first reading.

The Draft Amendment still consists of 6 chapters and 100 articles, and makes revisions in four respects: improving tax collection and administration measures, regulating tax law enforcement conduct, strengthening the protection of taxpayers' lawful rights and interests, and improving legal liability. Compared with the Current Law, the Draft Amendment adds institutions such as the taxpayer identification number and real-name tax filing, the tax-assistance obligation of internet platform enterprises, tax-related big-data risk management, general anti-avoidance, corrective filing, and recovery of tax from capital contributors; it abolishes the requirement for taxpayers engaged in production or business operations to separately complete tax registration within 30 days from the date of obtaining a business license; and it deletes the provisions of Article 37 of the Current Law concerning the seizure of goods and commodities from taxpayers that have not completed tax registration or that temporarily engage in business operations, as well as the provisions concerning the agricultural tax. Compared with the Draft for Comment, which comprises 106 articles, the Draft Amendment consolidates the eight provisions in Articles 43 to 50 of the Draft for Comment concerning tax preservation, compulsory enforcement, time limits and compensation into Articles 43 to 46; consolidates the scattered provisions on criminal liability into Articles 93 and 94; and deletes the provisions on joint incentives and joint disciplinary measures in Article 7, paragraphs 2 and 3 of the Draft for Comment, the provisions on the collection of electronic data evidence in Article 66, paragraph 2, and the provisions on fines for falsely issuing invoices in Article 83. Administrative penalties for falsely issuing invoices remain subject to the Measures for the Administration of Invoices.

II. The Eight Highlights of the Draft Amendment to the Tax Collection and Administration Law

(1) For the First Time, the Law-Enforcement Standard of Proof Is Prescribed in Legislation

The Current Law contains no provision on the standard of proof that tax authorities must reach in investigating and handling tax violations. Article 13, paragraph 2 of the Draft for Comment provided for the first time that "in investigating and handling tax violations, tax authorities shall see to it that the facts are clearly established, the evidence sufficient, the applicable basis correct and the procedure lawful, and shall handle the matter fairly and impartially in accordance with law." The Draft Amendment moves this into the law-enforcement principles provision in Article 10, providing that "in investigating and handling tax violations, tax authorities shall see to it that the facts are clearly established, the evidence conclusive, the applicable basis correct and the procedure lawful, and shall handle the matter fairly and impartially in accordance with law." The shift from "sufficient evidence" to "conclusive evidence" further requires that the evidence be authentic and reliable and that the conclusion it establishes be free from doubt. This formulation is consistent with the language used in the Administrative Reconsideration Law and the Administrative Litigation Law when reviewing the lawfulness of administrative acts.

The Draft Amendment also deletes Article 66, paragraph 3 of the Draft for Comment, namely: "Where the party expressly acknowledges evidence collected by the tax authorities, the probative effect of that evidence may be affirmed; where the party denies it, it shall fully adduce evidence." Hwuason had previously pointed out that this paragraph could readily give rise to a reversal of the burden of proof in inspection procedures, and its deletion responds to that concern.

(2) "Tou Shui" Renamed "Tao Shui", Achieving Terminological Alignment with the Crime of Tax Evasion under the Criminal Law

Article 63 of the Current Law uses the concept of "tou shui" (偷税) and enumerates specific methods, among which conduct consisting in a failure to declare is premised on a refusal to declare after being notified by the tax authorities to do so; Article 64, paragraph 2 separately provides for penalties for conduct that causes an underpayment of tax through failure to file a tax declaration, but does not characterize it as "tou shui". The Seventh Amendment to the Criminal Law, adopted in 2009, had already changed the crime of "tou shui" into the crime of "tao shui" (逃税). Article 67 of the Draft Amendment renames it "tao shui" and takes "filing a false tax declaration or failing to declare, thereby evading the payment of tax" as its core formulation, consistent with the language of Article 201 of the Criminal Law.

Compared with the Current Law, the Draft Amendment brings within "tao shui" the conduct of a taxpayer that has completed establishment registration and whose tax payable is relatively large but who fails to declare, and adds a catch-all clause. Compared with the Draft for Comment, the Draft Amendment deletes the definitional sentence "is tao shui" and the enumerations such as falsely listing expenditure and improperly enjoying tax preferences, and, in respect of unregistered taxpayers, retains the Current Law's formulation of refusing to declare after being notified by the tax authorities to declare. In addition, Article 94 of the Draft Amendment adds a third paragraph providing that "where criminal liability need not be pursued in accordance with law or criminal punishment is exempted, but an administrative penalty should be imposed, the judicial organ shall transfer the matter to the tax authorities for handling in accordance with law."

(3) A Cap on the Tax Late Payment Surcharge Is Set for the First Time, Together with Explicit Circumstances Exempt from Its Imposition

Article 32 of the Current Law provides for a late payment surcharge of 0.05% of the overdue tax per day, without setting any cap. Article 45, paragraph 2 of the Administrative Compulsion Law provides that "the amount of the fine for delayed performance or of the late payment surcharge shall not exceed the amount of the monetary payment obligation." Whether this cap applies to the tax late payment surcharge has long been disputed in practice. The Draft for Comment renamed the "late payment surcharge" (滞纳金) as the "late payment fee" (迟纳金), which was widely understood as intended to sidestep that dispute. Article 41 of the Draft Amendment restores the name "late payment surcharge" and provides that "the late payment surcharge on tax shall not exceed twice the amount of the tax itself." This is the first time a cap has been placed on the tax late payment surcharge in the form of law.

Article 42, paragraph 1 of the Draft Amendment lists as circumstances exempt from the surcharge: inability to pay on schedule due to force majeure; the need to make payment afresh by reason of a change in the place of remittance to the treasury or in the collecting authority; and payment of tax the recovery period of which has already expired — all subject to approval by tax authorities at or above the districted-city level. Paragraph 2 provides that "where a taxpayer, in accordance with Article 35 of this Law, is approved to defer the payment of tax, no late payment surcharge shall be imposed during the period of deferral," thereby enabling the deferred-payment system genuinely to relieve financial pressure.

(4) Compulsory Measures Are Extended to Individuals, but Subject to a Huge-Amount Threshold and Procedural Constraints

The tax preservation and compulsory enforcement measures provided in Articles 38 and 40 of the Current Law apply only to taxpayers engaged in production and business operations, withholding agents and tax guarantors. Article 45 of the Draft for Comment extended compulsory measures and compulsory enforcement to all taxpayers and withholding agents. Article 44 of the Draft Amendment retains compulsion against individuals while adding the precondition that the individual's unpaid tax be of a huge amount and requiring the approval of a tax bureau (tax sub-bureau) at or above the districted-city level; the scope of the exemption for the necessities of life is expanded from "housing and articles" under the Current Law to "housing, articles and expenses", and it is expressly provided that entry into an individual's residence is not permitted.

Article 45 of the Draft Amendment provides that the duration of compulsory measures shall in general not exceed six months, and that where the circumstances are complex, it may be extended upon approval by the competent tax department of the State Council, but the extension shall not exceed three months, and the decision to extend shall be promptly notified in writing to the party with a statement of reasons. Article 47 expands the persons subject to exit restriction from the taxpayer and its legal representative under the Current Law to the principal responsible person and the actual controller, but limits this to cases in which the unpaid tax is relatively large in amount and requires the approval of tax authorities at or above the districted-city level.

(5) Abolishing Pre-Reconsideration Tax Clearance and Extending the Time Limit for Filing Suit to Sixty Days

Article 88, paragraph 1 of the Current Law provides that, in a tax dispute, the taxpayer must first pay or remit the tax and the late payment surcharge in accordance with the tax decision of the tax authorities, or provide corresponding security, before it may apply for administrative reconsideration. Article 92 of the Draft Amendment provides that a tax dispute may be made the subject of an application for administrative reconsideration in accordance with law and that, if the party is dissatisfied with the reconsideration decision, it may bring suit after paying the tax and late payment surcharge or providing corresponding security — the tax clearance requirement being moved from the reconsideration stage back to the litigation stage, which substantially lowers the threshold for seeking redress.

The Draft Amendment also adds a provision that "the time limit for a taxpayer, withholding agent or tax guarantor to initiate administrative litigation is sixty days from the date of receipt of the administrative reconsideration decision." Under Article 45 of the Administrative Litigation Law, the time limit for bringing suit after reconsideration is fifteen days, whereas raising the funds for the tax or arranging tax security often takes a considerable time. Hwuason had previously recommended providing that the period for arranging tax security not be counted into the limitation period for bringing suit. The Draft Amendment responds to this issue by setting a special sixty-day time limit, which to a considerable extent alleviates the tension between the tax clearance precondition and the limitation period for suit, although situations in which the security formalities are complex and take more than sixty days may still arise.

(6) Corrective Filing Is Written into the Law, Providing a Basis for Taxpayers to Correct Errors on Their Own Initiative

The Current Law does not provide for corrective filing. Article 28 of the Draft Amendment adds a third paragraph providing that "where a taxpayer or withholding agent, after filing a tax return or submitting a report form on tax withheld and remitted or collected and remitted, discovers an error that needs to be corrected, it may file a corrective declaration in accordance with the time limit, method and other requirements prescribed by the competent tax department of the State Council." This confirms at the level of law the taxpayer's right to correct errors on its own initiative. Where a taxpayer, on discovering an error in its declaration, promptly corrects it through a corrective filing and satisfies the conditions of a first-time violation with minor harmful consequences, no administrative penalty may be imposed under Article 33, paragraph 1 of the Administrative Punishment Law, which helps guide taxpayers to correct errors on their own initiative.

(7) A New System for Recovery from Capital Contributors Is Established, Distinguishing Administrative Recovery from Judicial Recovery

The Current Law provides only in Article 50 for the tax authorities' right of subrogation and right of revocation, and lacks any direct means of recovery against capital contributors who evade tax through such conduct as withdrawing capital contributions or deregistering in violation of regulations. Article 56 of the Draft for Comment provided that where a capital contributor abuses the independent legal personality of the legal person and the limited liability of contributors, the tax authorities shall recover from the contributor, with the administrative organ directly applying the rule of disregard of legal personality. Article 52 of the Draft Amendment splits this into two paragraphs. Where a capital contributor fails to perform its capital contribution obligation in accordance with law, withdraws funds, or handles deregistration in violation of regulations, and the taxpayer fails or is dilatory in performing its statutory obligations, and the circumstances are serious, the tax authorities may, upon approval by tax authorities at or above the level of a province, autonomous region or municipality directly under the Central Government, recover from the contributor in accordance with law; where a capital contributor abuses the independent legal personality of the legal person and the limited liability of contributors to evade the payment of tax, the tax authorities may file a lawsuit with the people's court in accordance with law, and the people's court shall recover from the relevant contributor. The disregard of legal personality is thus left to the people's court to examine and determine, avoiding any final determination of civil legal relations by administrative power, which is consistent with Hwuason's earlier recommendation.

Article 50 of the Current Law enumerates only such circumstances as being dilatory in exercising a matured claim, relinquishing a matured claim, transferring property without consideration and transferring property at a manifestly unreasonable low price, and cites the already repealed Contract Law. Article 53 of the Draft Amendment adds the relinquishment of security for a claim, the malicious extension of the performance period of a matured claim, the acquisition of another person's property at a manifestly unreasonable high price, and the provision of security for another's debt, the purpose being to prevent tax debtors from disposing of property in more covert ways so as to evade outstanding tax and to bring the tax authorities' means of preserving tax claims into line with the provisions of the Civil Code on the right of subrogation and the right of revocation, while, in respect of transactions at unreasonable prices or the provision of security for others, making it a condition that the counterparty knew or ought to have known, thereby also safeguarding the transaction security of good-faith counterparties.

(8) Tax-Related Information Protection and Tax Credit Management Obtain a Legal Basis

Articles 6 and 8 of the Current Law address information sharing and confidentiality in relatively general terms. Article 6 of the Draft Amendment requires the establishment of a sound mechanism for normalized sharing, makes clear that tax-related information obtainable through information sharing may not be required to be provided repeatedly, and provides that tax authorities and tax officials shall keep strictly confidential the tax-related information they obtain and shall not use it for purposes other than tax collection and administration. Article 7 adds that "the State shall establish and improve the tax credit system, implement tax credit management and promote compliance with the tax law." The provisions on joint incentives and joint disciplinary measures in Article 7 of the Draft for Comment were not retained, thereby avoiding a general authorization of joint disciplinary measures in the Tax Collection and Administration Law.

III. Five Recommendations Concerning the Draft Amendment to the Tax Collection and Administration Law

(1) The Penalty Rules for Underpayment of Tax Not Constituting Tax Evasion Should Restore Tiered Circumstances

Article 68 of the Draft Amendment provides that "except as provided in Article 67 of this Law, where a taxpayer or withholding agent fails to declare in accordance with the provisions, thereby causing tax to remain unpaid or underpaid, the tax authorities shall recover the unpaid or underpaid tax and the tax late payment surcharge, and shall impose a fine of not less than 50% and not more than 100% of the unpaid or underpaid tax." With respect to a failure to declare, Article 64, paragraph 2 of the Current Law provides for a fine of not less than 50% and not more than 500%; the Draft Amendment brings within Article 68 the portion of such conduct that does not constitute tax evasion, and lowers the ceiling of the fine to 100%. As for an underpayment of tax caused by error in calculation or similar oversight, Article 52 of the Current Law provides only for the recovery of the tax and the late payment surcharge and sets no penalty rule, whereas the Draft Amendment brings it within the scope of penalty. Article 74 of the Draft for Comment had originally distinguished two tiers — "relatively serious circumstances" and "serious circumstances" — with no penalty in ordinary circumstances, but the Draft Amendment dispenses with the tiers.

Accordingly, where a taxpayer underpays tax by reason of a misapprehension of policy, an accounting error or the like, no penalty is imposed under the Current Law, whereas under the Draft Amendment a fine of not less than 50% of the underpaid tax will be imposed, and the lower limit of the fine is the same as that for tax evasion, which does not conform to the principle that the penalty should be proportionate to the fault. It is recommended that the provision in Article 68 concerning causing tax to remain unpaid or underpaid be amended to read: "Except as provided in Article 67 of this Law, where a taxpayer or withholding agent negligently fails to declare in accordance with the provisions, thereby causing tax to remain unpaid or underpaid, the tax authorities shall recover the unpaid or underpaid tax and the tax late payment surcharge; where the circumstances are relatively serious, a fine of not more than 50% of the unpaid or underpaid tax may be imposed; where the circumstances are serious, a fine of not less than 50% and not more than 100% of the unpaid or underpaid tax shall be imposed."

(2) The Tax Evasion Provision Should Specify the Element of Subjective Intent

Viewed from the perspective of alignment with the Criminal Law, Article 201 of the Criminal Law takes "adopting deception or concealment to file a false tax declaration or to fail to declare" as the mode of conduct of the crime of tax evasion; read together with Article 15, paragraph 2 thereof — "criminal liability for a negligent crime is borne only where the law so provides" — the crime of tax evasion is an intentional crime. In aligning Article 67 of the Draft Amendment with the Criminal Law, however, only the objective elements were incorporated: neither the qualifier "by deception or concealment" nor the subjective intent was adopted, and only in paragraph 1, item (1) was "unauthorized destruction" changed to "intentional damage". The problem of objective imputation inherited from the Current Law thus remains unresolved.

Viewed from the perspective of law enforcement practice, the State Taxation Administration's position that "tou shui" requires subjective intent as an element has been consistent. The Notice of the State Taxation Administration on Further Improving the Investigation and Handling of Tax Violation Cases (Shui Zong Fa [2017] No. 30) expressly provides that "where a taxpayer has not adopted deception or concealment, but has merely failed to pay or underpaid tax due to oversight such as an inaccurate understanding of tax policy or an error in calculation, ... it shall not be characterized as 'tou shui'." The official replies Shui Zong Han [2016] No. 274, Shui Zong Han [2013] No. 196 and Guo Shui Ban Han [2007] No. 513 reflect the same position and further emphasize that the burden of proof as to the taxpayer's subjective intent rests on the tax authorities. In grassroots law enforcement, however, the principle of fault-based imputation has not been strictly applied, and many taxpayers lacking subjective fault are nevertheless characterized as having committed "tou shui". Article 33, paragraph 2 of the Administrative Punishment Law adopts a presumption of fault while also providing that "where laws or administrative regulations provide otherwise, those provisions shall prevail". It is therefore necessary for the Tax Collection and Administration Law to elevate the above law-enforcement position into a legal rule, making clear that tax evasion requires subjective intent as an element and that the burden of proof rests on the tax authorities.

This is especially salient in the case of tax evasion consisting in a failure to declare. Article 67, paragraph 1, items (5) and (6) of the Draft Amendment retain, in respect of unregistered taxpayers, the premise under the Current Law of "refusing to declare after being notified by the tax authorities to declare", yet item (4) provides that a registered taxpayer whose tax payable is relatively large and who fails to declare constitutes tax evasion, giving rise to the paradox that "registration entails risk"; it is recommended that this be amended to read "where a taxpayer that has completed establishment registration carries out taxable acts and its tax payable is relatively large, and it refuses to declare after being notified by the tax authorities to declare". In addition, the terms "transfer" and "decomposition" in items (1) and (2) are neutral formulations, and it is difficult to judge from such conduct alone that the taxpayer possesses the intent to evade tax; it is recommended that they be deleted.

(3) The Cap on the Tax Late Payment Surcharge Should Be Consistent with the Administrative Compulsion Law

The setting of a two-times cap is worthy of approval, yet it still falls short of the provision in Article 45, paragraph 2 of the Administrative Compulsion Law. Calculated at 0.05% per day, the late payment surcharge is equivalent to an annualized rate of approximately 18%; 2,000 days are required for it to reach the principal amount of the tax, and 4,000 days — roughly eleven years — to reach twice that amount. Where a taxpayer is subjected to recovery within the ordinary recovery period and pays promptly, the surcharge will generally not reach the two-times cap; that cap operates principally in cases of unlimited-period recovery such as tax evasion and in cases of long-term tax arrears, and its practical effect in reducing the burden on most taxpayers is limited. It is recommended that the second sentence of Article 41 be amended to read "the tax late payment surcharge shall not exceed the principal amount of the tax", or, alternatively, that a distinction be drawn between compensatory tax interest and punitive late payment surcharge.

(4) Big-Data Risk Management Should Be Subject to Notification and Review Procedures

Article 38 of the Draft Amendment is a new power not found in the Current Law, but it neither defines the type and intensity of risk management measures nor provides for the notification of the results of risk analysis, for the making of statements and arguments in defense, or for review procedures. Big-data cross-checking conclusions may deviate from actual operating conditions, and taking measures or even initiating an audit without verification both increases the burden on taxpayers and wastes law enforcement resources. Risk alerts should also be linked to the corrective filing newly added in Article 28. Where a taxpayer, on that basis, conducts a self-examination, corrects its filing and pays the supplementary tax, a lighter or mitigated penalty may be imposed, or no penalty may be imposed, in accordance with Article 32 and Article 33, paragraph 1 of the Administrative Punishment Law, and the specific standards may be clarified in supporting provisions. It is recommended that Article 38 be amended to read: "The tax authorities shall have the power to use tax-related big data, including the declaration information of taxpayers and withholding agents and third-party information lawfully obtained, to conduct risk analysis of the authenticity, accuracy and completeness of the tax declared and paid by taxpayers and withholding agents, to assess their tax payable or the amount of tax they should remit, and to notify the taxpayers and withholding agents of the results of the risk analysis. Taxpayers and withholding agents shall have the right to submit relevant materials to the tax authorities, to make statements and arguments in defense, or to correct their filings through self-examination. The tax authorities shall review the results of the risk analysis and implement risk management measures commensurate with the degree of risk. The specific measures shall be formulated by the competent tax department of the State Council."

(5) Recovery from Capital Contributors Should Preferably Be Effected Uniformly Through Litigation

Article 52 of the Draft Amendment distinguishes two circumstances for recovery from capital contributors. Where a capital contributor abuses the independent legal personality of the legal person and the limited liability of contributors, the tax authorities shall file a lawsuit with the people's court; where a capital contributor fails to perform its capital contribution obligation in accordance with law, withdraws funds, or handles deregistration in violation of regulations, the tax authorities shall, upon approval, recover directly. In the latter circumstance, however, whether the capital contributions were actually made, whether a withdrawal of capital has occurred, and whether the deregistration was in violation of regulations are likewise matters involving a substantive determination of civil legal relations. Under the Company Law and the relevant judicial interpretations, the above liabilities should originally be asserted by creditors against shareholders through civil litigation. In addition, that paragraph provides only that the tax authorities "may recover the tax and tax late payment surcharge from the capital contributor" without clarifying the scope of the contributor's liability. Under the relevant judicial interpretations of the Company Law, a shareholder that has failed to perform its capital contribution obligation and a shareholder that has withdrawn its capital contribution bear, respectively, supplementary liability for compensation, within the limits of the unpaid capital contribution plus interest and of the withdrawn capital contribution plus interest, in respect of the portion of the company's debts that cannot be satisfied. The liability borne by a capital contributor in respect of a tax debt should not exceed this statutory boundary. It is recommended that the two paragraphs of Article 52 be unified so that the tax authorities file a lawsuit with the people's court in all cases, and the people's court examines and determines the contributor's liability. If the method of direct recovery by the tax authorities is retained, the amount recovered should also be expressly limited to the extent of the contributor's failure to perform its capital contribution obligation or its withdrawal of capital contributions, so as to avoid expanding the contributor's liability.

IV. Conclusion

Compared with the Current Law, the Draft Amendment abolishes pre-reconsideration tax clearance, incorporates corrective filing into the provisions of law, establishes at the legislative level the standard of proof for law enforcement, and sets a cap on the tax late payment surcharge, thereby taking substantive steps forward in regulating tax law enforcement and protecting the lawful rights and interests of taxpayers. Nevertheless, the penalty rules for underpayment of tax not constituting tax evasion do not match the degree of fault, the element of subjective intent in tax evasion has not yet been clarified, big-data risk management lacks corresponding rights safeguards, and the burden-relieving effect of the cap on the late payment surcharge is relatively limited; these matters remain to be further refined in subsequent deliberations. The foregoing issues bear on the balance between the efficacy of tax collection and administration and the protection of taxpayers' rights and interests, and also bear directly on the realization of the objective of the revision of the Tax Collection and Administration Law — namely, that taxpayers have a law to rely on and that tax authorities have a basis for law enforcement. Hwuason will continue to track the progress of the revision, actively submit amendment recommendations to the legislative body, and provide further interpretation of subsequent deliberative drafts and supporting provisions.