China's State Taxation Administration Photo: VCG

China's State Taxation Administration (STA) said on Tuesday that it does not conduct national and concentrated investigations of companies, nor there is any plan for a probe reaching back 20 or 30 years. It stressed that some publicly listed companies being asked to pay overdue taxes is just a form of normal taxation enforcement, in line with laws and regulations.

The government agency said in a statement on its website that it has noticed the discussion and fully understands the concerns of businesses and the public.

"The tax department hasn't carried out national, industry-specific or centralized tax investigations, nor there is any arrangement for probes going back 20 or 30 years," it said. Regarding recent reports of tax inspections and tax payments, the administration said that all of these activities are normal taxation enforcement in line with laws and regulations.

Recently, some A-share listed companies have reported that they were asked to pay overdue taxes, and the volume and period of the retrospective investigation sparked heated discussion.

VV Food and Beverage Co, based in East China's Jiangsu Province, said in a filing with the Shanghai Stock Exchange on June 13 that Zhijiang Liquor Trade Co, a former subsidiary of the company, received a notification from the local taxation bureau to pay overdue tax worth more than 85 million yuan ($11.72 million), claiming that the subsidiary had failed to pay the declared sales taxes between January 1, 1994 and October 31, 2009.

In addition to VV Food and Beverage Co, companies such as Ningbo Bohui Chemical Technology Co and PKU HealthCare Co also issued announcements relating to overdue tax payments, with reasons including a change in taxation policy and failure to declare taxes in line with laws and regulations, domestic news site thepaper.com reported.

The PKU HealthCare Co said in April that, following an internal review, the company found it had outstanding payments including for value-added tax, corporate income tax and overdue fines worth 19.45 million yuan between January 1, 2019 and May 31, 2023.

The new policy reflects strengthened taxation enforcement, as some companies may have evaded taxation due to equity transfers or a change in policy, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Tuesday.

The authorities will not launch a national campaign to investigate all publicly listed companies' tax payments over the past 30 years, as the central government is committed to building a sound business environment, Dong said.

"It's the basic responsibility of the tax department to organize taxation while it's also the government agency's responsibility to support enterprises' development. Only companies' sound development can create more taxes," the STA said, stressing that it's always committed to the earnest implementation of favorable policies while strictly preventing illegal behaviors, to support the healthy and regulated development of businesses.

It's the legal duty of the tax department to strengthen tax supervision, the STA stressed. "We will continue to improve taxation enforcement, with efforts to be made in precision enforcement and cracking down on [tax evasion]so as to build a fair competition environment for companies that abide by the laws," it said.

A State Council executive meeting held on April 26 called for enhanced efforts to foster a first-class business environment that is market-oriented, law-based and internationalized to ensure that fruitful results are achieved.

Improving the domestic business environment is an important step to boost social confidence, stimulate market vitality and enhance development potential, the meeting noted.

Global Times