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on Wednesday, 05 July 2017
in Business in China

China’s Tax Offenders Blacklist System in a nutshell

In 2016, the Blacklist system was introduced and implemented as a way of promoting “best practices” for tax recording and reporting among all business activities based in China. The relevant authorities now have the ability to enforce the 18 new disciplinary measures against any business that deem in violation of tax regulations. These new measures include: the restriction of access to governmental funds, the barring of companies leaving China, and the enforced disclosure of relevant information via the National Enterprise Credit Information Publicity System. Additionally, several other penalizing regulations are as follows:[1]

  1. Restriction on assuming certain positions in a market entity
  2. Inability to obtain a credit rating for financing by financial institutions
  3. Prohibition from purchasing certain commodities and services
  4. Restriction on obtaining land supplied by the government
  5. Prohibition from participating in governmental procurements
  6. Ineligibility to management of Customs-certified companies
  7. Restriction on some operations in the securities and insurance market
  8. Prohibition from the transfer of rights and interests of toll roads
  9. Restriction of governmental funds support
  10. Inability to issue corporate bonds
  11. Restrictions to applying for import quotas of agricultural products
  12. Inability to publish information via a major news website

The State Administration of Taxation (SAT) also created measures to help companies in violation of the new regulations to revise their prior business practices to ensure transparent business operations.

Under the same system, companies that fulfill the requirements and have good tax credit are eligible to receive certain incentives, such as preferential treatment when applying for tax deductions, or in financing requests. 

As an ongoing evaluation of tax compliance, Guangdong’s provincial tax authorities will rate companies and assign them to one of four groups: A, B, C, D. The A group is the most desirable as it contains companies who have received the highest grade by the government, down to the D group, which is the group composed of the lowest grades.2

This year, around 710,000 taxpaying entities are expected to be assessed and assigned a rating. Their information will be collected online through the tax credit management system, which will then calculate the scores each company will receive. The main aim of the reform is to give tax payers a greater sense of gain for correctly reporting tax activities, and for those companies categorized within the D level, an opportunity for the government to identify which companies need increased supervision and support.



[1] Understanding China’s Tax Offenders Blacklist System http://www.china-briefing.com/news/2016/12/16/understanding-chinas-tax-offenders-blacklist-system.html

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