Facing budget crunches, Chinese tax collectors descend on companies

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Chinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis

A vehicle with a sticker which reads"Chinese Heart" and"Chinese Dream" is seen near a construction project on the outskirts of Beijing, Thursday, July 25, 2024. .

That will be easier said than done, and experts question how thoroughly the party will follow through on its pledges to improve the tax regime and better balance control of government revenues. Economists have long warned the situation is unsustainable, saying China must beef up tax collection to balance budgets in the long run., corporate income, and value-added taxes to curry support, boost economic growth and encourage investment — often in ways that favored the rich, tax scholars say. According to most estimates, only about 5% of Chinese pay personal income taxes, far lower than in many other countries.

“When business owners are feeling insecure, how can there be more private investment growth in China?” said Chen Zhiwu, a finance professor at the University of Hong Kong’s business school. “An economic slowdown is inevitable.” Internet livestreaming celebrity Huang Wei, better known by her pseudonym, Weiya, was fined 1.3 billion yuan for tax evasion in 2021. She apologized and escaped prosecution by paying up, but her social media accounts were suspended, crippling her business.

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Facing budget crunches, Chinese tax collectors descend on companiesChinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis.
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