Law of the People's Republic of China Concerning the Administration of Tax Collection

Chapter I General Provisions

Article 1 This law has been formulated with a view to strengthening the administration of tax collection, regulating tax collection and payment, guaranteeing the tax revenue of the State, protecting the legitimate rights and interests of taxpayers and promoting economic and social development.

Article 2 This Law shall apply to the administration of tax collection in respect of all taxes collected by tax authorities in accordance with the law.

Article 3 The collection of tax or the cessation thereof, the reduction, exemption and refund of tax as well as the payment of tax dodged or overdue shall be implemented in accordance with the law or, if the State Council is authorized by the law to formulate relevant provisions, in accordance with the relevant provisions prescribed in administrative regulations formulated by the State Council. No governmental organs, entities or individuals may be permitted to make without authorization, by violating laws or administrative regulations, decisions regarding the collection of tax or the cessation thereof, the reduction, exemption or refund of tax, the payment of tax dodged or overdue or decisions in conflict with other tax laws or administrative regulations.

Article 4 Entities or individuals obligated to pay taxes prescribed in the laws or administrative regulations are the taxpayers.

Entities or individuals obligated to withhold and remit taxes or collect and remit taxes prescribed in the laws or administrative regulations are the withholding agents.

Taxpayers or withholding agents must pay taxes, or withhold and remit taxes or collect and remit taxes in accordance with the law or the administrative regulations.

Article 5 The competent tax departments under the State Council shall be in charge of the administration of tax collection for the whole country. All the national tax bureaus and local tax bureaus shall respectively administer the tax collection in accordance with the scopes of administration of tax collection stipulated by the State Council. The local people's government at each level shall strengthen its leadership or coordination in the administration of tax collection within its jurisdiction, support the tax authorities in performance of the duties in accordance with the law, and in the computation of the tax amount by national tariff, and the collection of taxes in accordance with the law. The various departments and entities concerned shall support and assist the tax authorities in the performance of the duties in accordance with the law.

No entities or individuals shall impede the tax authorities from performing duties in accordance with the law.

Article 6 The State shall systematically furnish the tax authorities at all levels with modern information technologies, strengthen the modernization of the information system on the administration of tax collection, establish and amplify the information communion system between tax authorities and other governmental administrative authorities.

Taxpayers, withholding agents and other relevant entities shall, in accordance with relevant provisions of the State, truthfully provide the tax authorities with information related to tax payment and taxes withheld and remitted or collected and remitted.

Article 7 Tax authorities shall extensively disseminate tax laws and administrative regulations, the knowledge of tax payment, and gratuitously provide taxpayers with consulting services on tax payment.

Article 8 Taxpayers and withholding agents shall have the right to inquire of the tax authorities about the tax laws and administrative regulations of the State as well as the information related to tax payment procedures.

Taxpayers and withholding agents shall have the right to require the tax authorities to maintain confidentiality for the information of the taxpayers and withholding agents. The tax authorities shall maintain confidentiality for the information of the taxpayers and withholding agents in accordance with the law.

Taxpayers shall, in accordance with the law, have the rights to apply for the reduction, exemption and refund of tax.

Taxpayers and withholding agents shall have the right to statement and the right of defense to the decisions made by tax authorities; and shall have the rights to apply for administrative reconsideration, institute administrative litigation, ask for State compensation, etc. in accordance with the law.

Taxpayers and withholding agents shall have the right to bring charges against or make exposure of any tax authority or tax official for violation of laws or disciplines.

Article 9 Tax authorities shall make the effort to make their officials qualified and efficient for their duties.

Tax authorities and tax officials must enforce the law impartially and devote themselves to their duties, be clean and honest, treat people politely, provide services courteously, respect the taxpayers and withholding agents and protect the rights of them, and accept supervisions in accordance with the law.

Tax officials shall not extort or take bribes, commit fraudulence for selfish purposes, neglect their duties, or fail to collect or under collect the taxes payable; nor shall they abuse their powers to over collect taxes or deliberately make difficulties for taxpayers and withholding agents.

Article 10 The tax authorities at all levels shall establish and amplify the administrative system of interior restriction and supervision.

The tax authorities at the upper levels shall supervise the enforcement of the law of the tax authorities at the lower levels in accordance with the law.

The tax authority at each level shall supervise and inspect its officials on the enforcement of laws and administrative regulations as well as their adherence to the principle of honesty and self-discipline.

Article 11 The duties of the officials in a tax authority who are respectively responsible for collection, administration, check and administrative reconsideration shall be clearly defined, and the rights and functions of the said officials shall be separated from each other and checked.

Article 12 Where any tax official has a personal interest with the taxpayer or withholding agent or in the case in violation of tax laws, when collecting taxes or investigating and disposing of a case in violation of tax laws, he shall withdraw.

Article 13 Any entity or individual shall have the right to make exposures of any acts committed in violation of the law or the administrative regulations. The authorities who receive such exposures or who are in charge of investigation and disposition shall keep the secret for the informers. The tax authorities shall grant the informers rewards in accordance with the relevant provisions.

Article 14 The "tax authorities" in this Law means the tax bureaus at all levels, their sub- bureaus, tax stations and tax institutions which are established in accordance with the provisions of the State Council and announced to the society.

Chapter II Tax Administration

Section 1 Tax Registration

Article 15 Any of the enterprises, branches in other localities established by such enterprises, sites engaged in production or business operations, individual businesses as well as institutions engaged in production or business operations (hereinafter referred to as "taxpayers engaged in production or business operations" in general) shall, within 30 days after the receipt of the business license, apply for the tax registration with the tax authority by producing the relevant documents. The tax authority shall, within 30 days as of the receipt of such report, examine and verify the relevant documents, and issue tax registration certificates.

The administrative authorities for industry and commerce shall regularly inform tax authorities of the registration and issuance of business licenses.

The scope of and methods for tax registration by taxpayers and for tax withholding registration formalities by withholding agents other than those as prescribed in Paragraph 1 of this Article shall be stipulated by the State Council.

Article 16 Where a change occurs in the contents of tax registration of a taxpayer engaged in production or business operations, the taxpayer concerned shall, within 30 days as of the date of completing the formalities for such change in registration with the administrative authority for industry and commerce or prior to the application for cancellation of registration to the administrative authority for industry and commerce, apply for and complete the formalities for the change or cancellation of tax registration with the tax authority by producing the relevant documents.

Article 17 A taxpayer engaged in production or business operations shall, in accordance with relevant provisions of the State, open a basic deposit account and other deposit accounts in a bank or other financial institution by producing the tax registration certificates, and shall report all his account numbers to the tax authority.

The bank or other financial institution shall record the numbers of the tax registration certificates in the accounts of the taxpayer engaged in production or business operations, and shall record the account numbers of the said taxpayer in the tax registration certificates.

When a tax authority is inquiring about the opening of account of a taxpayer engaged in production or business operations in accordance with the law, relevant banks and other financial institutions shall provide their assistance.

Article 18 Taxpayers shall use tax registration certificates in accordance with the provisions formulated by the competent tax departments under the State Council. The tax registration certificates shall not be lent, altered, damaged, traded or forged.

Section 2 Administration of Accounting Books and Supporting Vouchers

Article 19 Taxpayers or withholding agents shall establish accounting books in accordance with relevant laws and administrative regulations, the provisions formulated by the fiscal or tax department under the State Council, keep accounts based on legitimate and valid vouchers and conduct accounting.

Article 20 The financial and accounting systems or methods and the accounting software of a taxpayer engaged in production or business operations shall be submitted to the tax authority for records.

Where the financial and accounting systems or methods of a taxpayer or a withholding agent are in conflict with the relevant tax provisions formulated by the State Council or the fiscal or tax departments under the State Council, the calculation of the tax payable as well as the tax withheld and remitted or collected and remitted shall be made in accordance with the relevant tax provisions formulated by the State Council or the fiscal or tax departments under the State Council.

Article 21 A tax authority is the authority in charge of invoices, and is responsible for the administration and supervision of the printing, purchase, issuance, acquirement, maintenance, cancellation of invoices.

A entity or individual shall, when purchasing or selling commodities, providing or accepting operational services, and being engaged in other operational activities, issue, use and acquire invoices in accordance with relevant provisions.

The measures on the administration of invoices shall be formulated by the State Council.

Article 22 Special VAT invoices shall be printed by enterprises designated by the competent tax departments under the State Council; other invoices shall be printed by enterprises designated by the tax departments of the people's governments of the provinces, autonomous regions and municipalities directly under the Central Government in accordance with the provisions made by the competent tax departments under the State Council.

No enterprises are permitted to print invoices without authorization by the competent tax departments prescribed in the preceding paragraph.

Article 23 The State may, based on the needs on the administration of tax collection, actively extend and apply tax-control facilities. Taxpayers shall install and use the tax-control facilities in accordance with the provisions, and shall not damage the tax-control facilities or alter them without authorization.

Article 24 Taxpayers or withholding agents engaged in production or business operations must maintain accounting books, supporting vouchers for the accounts, tax payment receipts and other relevant information within the period prescribed by the fiscal or tax departments under the State Council. Accounting books, supporting vouchers for the accounts, tax payment receipts and other relevant information shall not be forged, revised or damaged without authorization.

Section 3 Filing Tax Returns

Article 25 Taxpayers must, in accordance with the laws and administrative regulations, and in keeping with the time limit and contents for filing tax returns determined by the tax authorities in accordance with the provisions in laws and the administrative regulations, truthfully file tax returns, submit tax return statements, financial and accounting statements as well as other information on tax payment required by the tax authorities based on practical needs.

Withholding agents must, in accordance with the laws and administrative regulations, or the time limit and contents for filing tax returns determined by the tax authorities in accordance with the provisions in laws and the administrative regulations, truthfully submit reporting schedules on taxes withheld and remitted or collected and remitted as well as other relevant information required by the tax authorities based on practical needs.

Article 26 Taxpayers and withholding agents may directly file tax returns or submit reporting schedules on the taxes withheld and remitted or collected and remitted in tax authorities directly or by post, data telegram or by other means in accordance with relevant provisions.

Article 27 Where a taxpayer or withholding agent is unable to file tax returns or to submit reporting schedules on the taxes withheld and remitted or collected and remitted within a prescribed time limit, the filing of the tax returns or the submission of the reporting schedules may be postponed upon check and approval by the tax authority,.

Where the filing of the tax returns or submission of the reporting schedules prescribed in the preceding paragraph is postponed upon check and approval, the taxes shall be prepaid within the period of tax payment in accordance with the amount of taxes actually paid in the last period or assessed by the tax authority, and the tax settlement shall be handled within the postponed period upon check and approval.

Chapter III Tax Collection

Article 28 The tax authorities shall collect taxes in accordance with the laws and administrative regulations. They shall not collect, cease to collect, over collect, under collect, collect in advance, postpone the collection of or apportion taxes in violation of the laws or administrative regulations.

The amount of agricultural taxes payable shall be assessed in accordance with the laws and administrative regulations.

Article 29 Except for tax authorities, tax officials and the entities and personnel entrusted by tax authorities in accordance with the law or the administrative regulations, no entity or individual may collect taxes.

Article 30 Withholding agents shall fulfill their obligations of withholding or collecting taxes in accordance with the laws and administrative regulations. The tax authorities shall not impose any tax withholding or collection requirements on the entities or individuals who are not obligated to withhold or collect tax in accordance with the law or the administrative regulations.

When a withholding agent is withholding or collecting taxes in accordance with the law, the taxpayer shall not refuse to pay taxes. If the taxpayer refuses to pay taxes, the withholding agent shall promptly report the case to the tax authority for disposition.

The tax authorities shall, in accordance with the relevant provisions, pay a handling fee to withholding agents for withholding or collecting taxes.

Article 31 A taxpayer or withholding agent shall pay or remit taxes within the time limit prescribed in the laws or administrative regulations, or determined by the tax authority in accordance with the laws and administrative regulations.

Where a taxpayer is unable to pay taxes within a prescribed time limit because of special difficulties, he may, upon approval of the State tax bureau or local tax bureau of a province, autonomous region, municipality directly under the Central Government, defer the tax payment for a period of not more than three months.

Article 32 Where a taxpayer fails to pay taxes or a withholding agent fails to remit taxes within a prescribed time limit, the tax authority shall, in addition to ordering the taxpayer or withholding agent to pay or remit the taxes within the prescribed time limit, impose a late fee at the rate of 0.05% per day of the amount of taxes in arrears, on the day the tax payment is overdue.

Article 33 A taxpayer may submit a written application for tax reduction or exemption to the tax authority in accordance with the laws and administrative regulations.

Applications for tax reduction or exemption shall be examined and approved by the authorities designated for examination and approval of tax reduction or exemption as prescribed in the laws or administrative regulations. The decisions on tax reduction or exemption made by the people's governments at all local levels, the competent departments of the people's governments at all levels, entities or individuals without authorization and in violation of the laws or administrative regulations shall be null and void. The tax authorities shall not execute such decisions, and shall report to the tax authorities at the upper level.

Article 34 When a tax authority collects taxes, it must issue tax payment receipts to the taxpayers. A withholding agent shall, when withholding or collecting taxes, issue tax withholding or collection vouchers if the taxpayer so requires.

Article 35 Where a taxpayer is in any of the following circumstances, the tax authority shall have the right to assess the amount of taxes payable by the taxpayer:

(1) accounting books are not required necessarily to be established in accordance with the laws and administrative regulations;

(2) accounting books are required by the laws and administrative regulations to be established but have not been established;

(3) a taxpayer destroys accounting books without authorization or refuses to provide information on tax payment;

(4) although accounting books have been established, the accounting entries have not been entered in an appropriate manner or the information on costs, receipt vouchers and expense vouchers are incomplete, causing difficulties in conducting an audit;

(5) a taxpayer who is obligated to pay taxes fails to go through tax filing procedures within a prescribed time limit and, after having been ordered by the tax authority to file tax returns within a prescribed time limit, still fails to file the tax returns within the prescribed time limit;

(6) the taxation basis filed by a taxpayer is obviously much lower, and without reasonable ground.

Specific procedures and methods for tax authorities to assess the amount of taxes payable shall be stipulated by the competent tax departments under the State Council.

Article 36 The receipt or payment of charges or fees in business transactions between an enterprise (or institution or site engaged in production or business operations) established in China by a foreign enterprise and its associated enterprises, shall be made at arm's length prices. Where the receipt or payment of charges or fees is not made at arm's length prices and results in a reduction of the taxable income, the tax authorities shall have the right to make reasonable adjustments.

Article 37 Tax authority shall assess the amount of taxes payable by a taxpayer engaged in production or business operations who does not apply for tax registration in accordance with relevant provisions or by a taxpayer temporarily engaged in business operations, and shall order them to pay taxes. Where the said taxpayer refuses to pay taxes, the tax authority may distrain his commodities or goods, the value of which shall be equivalent to the amount of taxes payable. Where the amount of taxes payable is paid after the goods or commodities have been distrained, the tax authority must immediately release the distrainment and return the distrained commodities or goods to the entity or individual. Where the amount of taxes payable is still not paid after the distrainment, the commodities or goods which have been distrained may, upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) at the county level or above, be sold by auction or sold off in accordance with the law, the proceeds from the commodities or goods sold by auction or sold off may be used to make good the amount of taxes payable.

Article 38 Where a tax authority has grounds for deeming that a taxpayer engaged in production or business operations has any act of evading tax payment obligations, the tax authority may, prior to the prescribed date of the tax payment, order the taxpayer to pay the taxes payable within a prescribed time limit. In the event that the tax authority discovers there is obvious evidence that the taxpayer has transferred or concealed its taxable commodities, goods and other properties, or taxable income within the prescribed time limit, the tax authority may order the taxpayer to provide a guaranty for tax payment. If the taxpayer is unable to provide a guaranty for tax payment, the tax authority may, upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) at the county level or above, adopt the following preservative measures of taxation:

(1) notify in writing the banks or other financial institutions with which the taxpayer has opened an account to freeze the taxpayer's deposits of an amount equivalent to the amount of taxes payable temporarily;

(2) distrain or seal up the taxpayer's taxable commodities, goods or other properties, the value of which is equivalent to the amount of taxes payable.

If the taxpayer makes the tax payment within the time limit as prescribed in the preceding paragraph, the tax authority must immediately release the preservative measures of taxation. If the taxpayer fails to make the tax payment at the expiration of the time limit, the tax authority may, upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) at the county level or above, notify in writing the bank or other financial institution with which the taxpayer has opened an account to withhold and remit the amount of tax from the taxpayer's deposits which have been frozen, or sell by auction or sell off in accordance with law the commodities, goods or properties which have been distrained and use the proceeds from the commodities, goods or properties sold by auction or sold off to make good the amount of taxes payable.

The necessary lodgings and articles of an individual and his dependent family members to make a living shall not be within the scope of the preservative measures of taxation.

Article 39 Where a taxpayer has made the tax payment within the time limit, but the tax authority fails to immediately release the preservative measures of taxation, thus causing losses to the legitimate rights and benefits of the taxpayer, the tax authority shall bear compensation liabilities.

Article 40 Where a taxpayer engaged in production or business operations or a withholding agent fails to pay or remit taxes, or a tax payment guarantor fails to pay the guaranteed amount of taxes within the prescribed time limit, the tax authority shall order him to pay the taxes within a specified time limit. If they fail to pay the taxes within the specified time limit, the tax authority may, upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) at the county level or above, adopt the following mandatory enforcement measures:

(1) notify in writing the bank or other financial institution with which the taxpayer, withholding agent or tax payment guarantor has opened an account to withhold and remit the amount of taxes from its deposits;

(2) distrain, seal up or sell by auction or sell off in accordance with the law the commodities, goods, or other properties of the taxpayer, withholding agent or tax payment guarantor, the value of which shall be equivalent to the amount of taxes payable, and to use the proceeds from the commodities, goods or properties sold by auction or sold off to make good the amount of taxes payable.

At the time when the tax authority is adopting the mandatory measures, it shall adopt the relevant mandatory measures to collect the late fee which has not been paid by the taxpayer, withholding agent or tax payment guarantor.

The necessary lodgings and articles of an individual and his dependent family members to make a living shall not be within the scope of the mandatory enforcement measures.

Article 41 The power to adopt the preservative measures of taxation or mandatory enforcement measures prescribed in Article 37, 38 and 40 shall not be exercised by any entity or individual other than the statutory tax authorities.

Article 42 Any of the tax authorities must adopt preservative measures of taxation or mandatory enforcement measures according to the legal authority and the legal proceedings, and shall not seal up or distrain the necessary lodgings or articles of a taxpayer himself and his dependent family members to make a living.

Article 43 Where a tax authority abuses its powers and illegally adopts preservative measures of taxation or mandatory enforcement measures, or improperly adopts preservative measures of taxation or mandatory enforcement measures, thus causing losses to the legitimate rights and interests of a taxpayer, a withholding agent or a tax payment guarantor, it shall bear compensation liabilities in accordance with the law.

Article 44 Where a taxpayer or his legal representative who has not paid the amount of taxes payable needs to leave China, he shall pay the taxes payable and the late fee or provide a guaranty to the tax authority before leaving the country. If the taxpayer neither pays the taxes payable and the late fee nor provides a guaranty, the tax authority may notify the exit authority to stop the taxpayer from leaving the country.

Article 45 When a tax authority is collecting taxes, the taxation shall have precedence over unsecured credits unless otherwise prescribed in the law; if the event which a taxpayer has not paid the amount of tax payable happens before the taxpayer mortgages or pledges his properties or before the taxpayer's properties are retained, the taxation shall be prior to the right of mortgage, the right of pledge and the lien.

Where a taxpayer has not paid the amount of taxes payable, and meanwhile he is imposed on a fine or confiscation of illegal proceeds upon the decision by an administrative authority, the taxation shall have precedence over the fine and the confiscation of illegal proceeds.

Tax authorities shall regularly announce the circumstances of the unpaid amount of taxes payable by taxpayers.

Article 46 Where a taxpayer has not paid the taxes payable but mortgages or pledges his properties, he shall state the fact of not paying the taxes payable to the mortgagee or the pledgee. The mortgagee or the pledgee may request the tax authority to provide relevant information on the taxpayer's not paying the taxes payable.

Article 47 When distraining commodities, goods or other properties, the tax authority must issue a receipt for the distrained items. When sealing up commodities, goods or other properties, the tax authority must write out a list of these items.

Article 48 Where a taxpayer has the circumstance of merger or division, he shall report to the tax authority, and make a full payment of taxes in accordance with the law. Where the taxpayer fails to make a full payment of taxes at the time of its merger, the merged taxpayer shall continue to perform the unfinished tax payment obligations; where the taxpayer fails to make a full payment of taxes at the time of its division, the divided taxpayers shall bear joint liabilities for the unfinished tax payment obligations.

Article 49 A taxpayer who has not paid a large amount of taxes payable shall report to the tax authority before he disposes of his immovable properties or large amount of assets.

Article 50 Where a taxpayer who has not paid the taxes payable causes any loss to the State taxation due to his idleness in exercising his mature credits, or waiving his mature credits, or gratuitously transferring his properties, or transferring his properties at an obviously unreasonable low price but the transferee knows the fact, the tax authority may exercise its rights of subrogation and rescission in accordance with the provisions in Article 73, 74 of the Contract Law.

Where the tax authority exercises its rights of subrogation and rescission in accordance with the preceding paragraph, the taxpayer who has not paid the taxes payable shall not be released from his tax payment obligations unperformed and the legal liabilities he shall bear.

Article 51 Once the tax authority finds that a taxpayer has paid an amount of taxes in excess of the taxes payable, the authority shall immediately refund the excess amount to the taxpayer. Where a taxpayer discovers that he has paid an amount of taxes in excess of the taxes payable within three years from the date the tax payment has been made, he may claim a refund of the excess amount of taxes from the tax authority plus the bank deposit interest of the time period. Upon examination and verification of the case, the tax authority shall immediately refund the excess amount of taxes. Where refund from the State treasury is involved, the excess amount of taxes shall be refunded in accordance with relevant laws and administrative regulations on the administration of the State treasury.

Article 52 Where a taxpayer or withholding agent fails to pay taxes or underpay taxes due to the fault of the tax authority, the tax authority may, within three years, require the taxpayer or withholding agent to pay the taxes in arrears, but they shall not impose any late fee.

Where a taxpayer or withholding agent fails to pay taxes or underpay taxes due to his own faults, such as making an erroneous calculation, the tax authority may, within three years, pursue the collection of the taxes in arrears and the late fee. In case of any particular circumstance, the period for pursuing the collection of the taxes in arrears may be extended to five years.

For evasion of taxes, refusal to pay taxes and fraudulence of taxes, the tax authorities shall not be restricted by the period prescribed in the preceding paragraph from pursuing the collection of the taxes unpaid or underpaid, the late fee or the fraudulently obtained taxes.

Article 53 The national taxation bureaus and local taxation bureaus shall turn over the collected amount of taxes to the State treasury, according to the scope of administration on tax collection stipulated by the State and the budget levels on the tax amount to be turned over to the State treasury,

For any illegal act on tax payment which is found out by the auditing authority or the fiscal authority, the tax authority shall, based on the decisions or opinions of the relevant authorities, turn over in accordance with the law the amount of taxes to be collected and the late fee to the State treasury based on the budget levels on the tax amount to be turned over to the State treasury, and shall report to the relevant authority about the result in time.

Chapter IV Tax Inspection

Article 54 A tax authority shall have the rights to conduct the following tax inspections:

(1) to inspect a taxpayer's accounting books, supporting vouchers for the accounts, statements and the relevant information; to inspect a withholding agent's accounting books, supporting vouchers for the accounts and the relevant information in respect of the amount of taxes withheld and remitted or collected and remitted;

(2) to inspect a taxpayer's taxable commodities, goods or other properties at the taxpayer's places where production or business operations are conducted and the places where goods are stored; to inspect a withholding agent's operational conditions in respect of the withholding and remittance of taxes or the collection and remittance of taxes;

(3) to order a taxpayer or withholding agent to provide the documents, evidentiary materials and information relating to the payment of taxes or the amount of taxes withheld and remitted or collected and remitted;

(4) to make inquiries of a taxpayer or withholding agent regarding the relevant issues and circumstances relating to the payment of taxes or the amount of taxes withheld and remitted or collected and remitted;

(5) to inspect supporting documents, vouchers and information relating to the taxable commodities, goods or other properties transported by consignment or sent by post by a taxpayer at railway stations, docks, airports, postal services and the branches thereof;

(6) upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) at the county level or above, to inquire about the deposit accounts that a taxpayer engaged in production or business operations or a withholding agent has opened with the bank or other financial institution, by the nationally uniform permit for the inspection of deposit accounts; when investigating a case in violation of tax laws, a tax authority may, upon approval of the commissioner of a tax bureau (or a sub-bureau thereof) of a city divided into districts or an autonomous prefecture or a level above, inquire about the savings and deposits of the suspects in the case. The information obtained by tax authorities through inquiry shall not be used for purposes other than taxation.

Article 55 Where a tax authority finds that the taxpayer has any act of evading tax payment obligations, and has obvious evidence that the taxpayer has transferred or concealed its taxable commodities, goods and other properties, or taxable income, when conducting a tax inspection on the tax payment of a taxpayer engaged in production or business operations during the past tax payment period in accordance with the law, the authority may adopt preservative measures of taxation or mandatory enforcement measures in accordance with the approved scope of power prescribed in this Law.

Article 56 Taxpayers or withholding agents must accept the tax inspections by the tax authorities in accordance with the law, provide the facts accurately and the relevant information, and shall not refuse to cooperate with the authority or conceal any facts.

Article 57 When the tax authority makes tax inspections in accordance with the law, it shall have the right to investigate relevant entities and individuals about the information of the taxpayers, withholding agents and other parties relating to tax payment and taxes withheld and remitted or collected and remitted. The relevant entities or individuals shall be obligated to truthfully provide the relevant information and evidentiary materials to the tax authority.

Article 58 When investigating a tax case in violation of the law, the tax authority may record, tape-record, video-tape, photograph and reproduce the relevant information and material in respect of the case.

Article 59 When making tax inspection, the officials of the tax authorities shall produce tax inspection identity cards and tax inspection notices, and shall be responsible for maintaining confidentiality for the persons under investigation; where such an official does not produce any tax inspection identity card or tax inspection notice, the party that is to be inspected shall have the right to refuse the inspection.

Chapter V Legal Liabilities

Article 60 The tax authority shall order a taxpayer to correct any of the following acts committed by the taxpayer within a time limit, and may impose a fine of not more than 2,000 Yuan on the taxpayer. If the case is serious, the tax authority may impose a fine with the amount from 2,000 Yuan to 10,000 Yuan on the taxpayer:

(1) failure to apply for tax registration, or change or cancellation of tax registration within a prescribed time limit;

(2) failure to establish or maintain accounting books, or maintain supporting vouchers for the accounts and the relevant information in accordance with the provisions;

(3) failure to report the financial and accounting systems, the financial and accounting methods or the accounting software to the tax authority for future reference in accordance with the provisions;

(4) failure to report all of his bank accounts to the tax authority in accordance with relevant provisions;

(5) failure to install and use the tax-control facilities in accordance with relevant provisions, or damaging the tax-control facilities or altering them without authorization.

Where a taxpayer does not apply for tax registration, he shall be ordered by the tax authority to correct his act; where the taxpayer does not correct his act within a prescribed time limit, the tax authority may ask the administrative authority for industry and commerce to revoke his business license.

Where a taxpayer does not use the tax registration certificates in accordance with the provisions, or if he lends, alters, damages, trades or forges the tax registration certificates, he shall be imposed on a fine with the amount from 2,000 Yuan to 10,000 Yuan; if the case is serious, he shall be imposed on a fine with the amount from 10,000 Yuan to 50,000 Yuan.

Article 61 Where a withholding agent fails to establish and maintain accounting books for the taxes withheld and remitted or collected and remitted, or fails to maintain supporting vouchers for the accounts in respect of the taxes withheld and remitted or collected and remitted in accordance with the relevant provisions, the tax authority shall order the withholding agent to correct the act within a time limit, and may impose a fine of not more than 2,000 Yuan on the withholding agent; if the case is serious, the tax authority may impose a fine with the amount from 2,000 Yuan to 5,000 Yuan on the withholding agent.

Article 62 Where a taxpayer fails to file tax returns or submit the information on tax payment within a prescribed time limit or a withholding agent fails to furnish reporting schedules on the taxes withheld and remitted or collected and remitted or fails to submit the relevant information to the tax authority within the prescribed time limit, the tax authority shall order the taxpayer or withholding agent to correct the acts within the prescribed time limit and may impose a fine of not more than 2,000 Yuan on the taxpayer or withholding agent; if the case is serious, the tax authority may impose a fine with the amount from 2,000 Yuan to 10,000 Yuan on the taxpayer or withholding agent.

Article 63 "Evasion of tax" means that a taxpayer forges, revises, conceals or destroys without authorization the accounting books or supporting vouchers for the accounts, or overstates expenses or does not state or understates income in accounting books, or refuses to file tax returns after having been notified by the tax authority to do so or files fraudulent tax returns, does not pay or underpays the taxes payable. For a taxpayer who evades taxes, the tax authority shall pursue the payment of the taxes unpaid or underpaid, the late fee, and impose a fine with the amount from 50% to five times of the taxes unpaid or underpaid; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Where a withholding agent fails to pay or underpays the taxes which have been withheld or collected by the means specified in the preceding paragraph, the tax authority shall pursue the payment of the taxes unpaid or underpaid and the late fee, and impose a fine with the amount from 50% to five times of the taxes unpaid or underpaid; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 64 Where a taxpayer or a withholding agent works out fraudulent taxation basis, he shall be ordered by the tax authority to correct his acts and be imposed on a fine of 50,000 Yuan or less.

Where a taxpayer does not file tax returns, or does not pay or underpays the taxes payable, the tax authority shall pursue the payment of the taxes unpaid or underpaid and the late fee, and impose a fine with the amount from 50% to five times of the taxes unpaid or underpaid.

Article 65 Where a taxpayer fails to pay the taxes payable, or hinders the tax authority from pursuing the payment of the taxes unpaid by means of transferring or concealing the properties, the tax authority shall pursue the payment of the taxes unpaid and the late fee, and impose a fine with the amount from 50% to five times of the taxes unpaid; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 66 For anyone who fraudulently obtains tax refund for export from the State by fraudulently declaring the commodities he produces or operates as export goods or by other deceptive means, the payment of the refunded tax which has been fraudulently obtained shall be pursued by the tax authority, and a fine shall be imposed on him (the amount of the fine shall be the amount of tax fraudulently obtained but it shall not be more than five times of this amount); if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

For anyone who fraudulently obtains tax refund for export from the State, the tax authority may suspend its work on the tax refund for export within the prescribed period.

Article 67 In the case of refusal to pay taxes, which means the refusal to pay taxes by using violence or menace, the tax authority shall pursue the payment of the taxes the taxpayer refused to pay and the late fee, the taxpayer's criminal liabilities shall be investigated in accordance with the law. If the case is slight and the acts do not constitute an offence, the tax authority shall pursue the payment of the taxes the taxpayer refused to pay and the late fee, and impose a fine of the amount of taxes the taxpayer refused to pay, but it shall not be more than five times of this amount.

Article 68 Where a taxpayer or withholding agent which has been ordered by the tax authority to pay, within a prescribed time limit, the amount of taxes which should be paid or remitted but have not been paid or have been underpaid within the time limit, fails to pay the amount of taxes within the time limit, the tax authority may, in addition to pursuing the payment of the amount of taxes the taxpayer or withholding agent has failed to pay or underpaid by the mandatory measures as prescribed in Article 40 of this Law, impose a fine of 50% or more of the amount of taxes which have not been paid or underpaid but not more than five times of the said amount.

Article 69 Where a withholding agent fails to withhold or collect the taxes which should have been withheld or collected, the tax authority shall pursue the payment of taxes from the taxpayer, and impose a fine on the withholding agent with the amount from 50% to five times of the amount of taxes which should have been withheld or collected.

Article 70 Where a taxpayer or a withholding agent evades, refuses or impedes by other means the inspections by the tax authority, the tax authority shall order the taxpayer to correct his acts, and may impose a fine of 10,000 Yuan or less; if the case is serious, a fine with the amount from 10,000 Yuan to 50,000 Yuan shall be imposed.

Article 71 Where invoices are printed illegally in violation of the provisions prescribed in Article 22 of this Law, the tax authority shall destroy the invoices which have been illegally printed, confiscate the illegal proceeds and the tools for printing the false invoices, and impose a fine with the amount from 10,000 Yuan to 50,000 Yuan. If such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 72 Where a taxpayer engaged in production or business operations or a withholding agent has any of the illegal acts on tax payment prescribed in this Law, and refuses to accept the dispositions by the tax authority, the tax authority may take over the invoices from the taxpayer or cease selling invoices to him.

Article 73 Where the bank or other financial institution with which a taxpayer or a withholding agent has opened an account refuses the tax authority to inspect, in accordance with the law, the taxpayer's or withholding agent's deposit account, or refuses to execute the decision made by the tax authority on freezing deposits or withholding taxes, or assists the taxpayer or withholding agent in transferring deposits after receiving written notice from the tax authority, thus causing loss of taxes, the tax authority shall impose a fine on the bank or institution with the amount from 100,000 Yuan to 500,000 Yuan, and a fine on the officials in charge who are directly responsible and other officials directly responsible with the amount from 1,000 Yuan to 10,000 Yuan.

Article 74 Any of the administrative penalties prescribed in this Law with the amount of fine to be 2,000 Yuan or less may be decided by tax stations.

Article 75 The tax authorities and judicial authorities shall turn over the gains from fines and confiscation on taxes to the State treasury by the budget levels on the taxes that should be turned over to the State treasury.

Article 76 Where a tax authority violates the provisions by modifying the scope of administration on tax collection or a budget level on the taxes that should be turned over to the State treasury without authorization, he shall be ordered to correct its acts within a time limit, and the officials in charge who are directly responsible and other officials directly responsible shall be subject to such administrative sanctions as demotion and dismission from their posts in accordance with the law.

Article 77 Where a taxpayer or a withholding agent has any of the acts prescribed in Article 63, 65, 66, 67, 71 of this Law and is suspected to have committed an offence, the tax authority shall hand over the case to the judicial authority in accordance with the law, and the criminal liabilities shall be investigated.

Where a tax official commits fraudulence for selfish purposes, and does not hand over the case that should be handed over to the judicial authority for investigation of criminal liabilities, his criminal liabilities shall be investigated if the case is serious.

Article 78 Where anyone collects taxes without being entrusted by a tax authority in accordance with the law, the collector shall be ordered to return the collected properties, and shall be subject to administrative sanctions or administrative penalties in accordance with the law; if such acts cause any loss to the legitimate rights and interests of other people, the collector shall bear compensation liabilities in accordance with the law; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 79 Where a tax authority or a tax official seals up or distrains necessary lodgings or articles of an individual taxpayer and his dependent family members to make a living, the tax authority or tax official shall be ordered to return the said lodgings or articles, and shall be subject to administrative sanctions; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 80 Where a tax official colludes with a taxpayer or withholding agent, or instigates or assists them to commit the acts specified in Article 63, 65, 66 of this Law, and such acts constitute an offence, criminal liabilities of the tax official shall be investigated in accordance with the law. If such acts do not constitute an offence, administrative sanctions shall be imposed on the tax official in accordance with the law.

Article 81 Where a tax official takes advantage of his position and power to accept or extort properties of a taxpayer or withholding agent, or to seek other unjustifiable benefits, and such acts constitute an offence, criminal liabilities of the tax official shall be investigated in accordance with the law. If such acts do not constitute an offence, administrative sanctions shall be imposed on the tax official in accordance with the law.

Article 82 Where tax officials commit fraudulence for selfish purposes or neglect their duties and fail to collect or under collect the taxes payable, thus causing enormous losses in the tax revenue of the State, and such acts constitutes an offence, criminal liabilities of the tax officials shall be investigated in accordance with the law; if such acts do not constitute an offence, administrative sanctions shall be imposed on the tax officials in accordance with the law.

Tax officials who abuse their powers and deliberately create difficulties for taxpayers and withholding agents shall be removed from taxation posts and be subject to administrative sanctions in accordance with the law.

Where a tax official retaliates against the taxpayers, withholding agents or other exposure makers (informers) who make charges against or exposures of his acts in violation of tax laws or tax disciplines, he shall be subject to administrative sanctions; if such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Where a tax official violates the laws or administrative regulations by intentionally over evaluating or under evaluating the taxation output of agricultural taxes, thus causing the taxes over collected or under collected, infringing upon the legitimate rights and interests of the farmers or damaging State benefits, and such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law; if such acts do not constitute an offence, administrative sanctions shall be imposed on the tax official in accordance with the law.

Article 83 Anyone who violates the laws or administrative regulations by collecting taxes in advance, postponing the collection of taxes or apportioning taxes, he shall be ordered by the authority at the upper level or the administrative supervision authority to correct his acts. The officials in charge who are directly responsible and other officials directly responsible shall be subject to administrative sanctions.

Article 84 Where decisions regarding the collection and cessation of taxes or, the reduction, exemption or refund of taxes, or the payment of taxes underpaid, or decisions in conflict with other tax laws or administrative regulations have been made without authorization and in violation of the laws or administrative regulations, these decisions shall be revoked in accordance with this Law. In addition, the amount of taxes underpaid shall be collected and the amount of taxes over collected shall be refunded. The administrative liabilities of the officials in charge who are directly responsible and other officials directly responsible shall also be investigated by the authorities at the upper level. If such acts constitute an offence, criminal liabilities shall be investigated in accordance with the law.

Article 85 Where any tax official, when collecting taxes or investigating and disposing of a case in violation of tax laws, does not withdraw in accordance with this Law, the officials in charge who are directly responsible and other officials directly responsible shall be subject to administrative sanctions.

Article 86 For anyone who shall be subject to administrative penalties due to his act of violating tax laws or administrative regulations, if such an act has not been found within five years, he shall no longer be subject to administrative penalties.

Article 87 Where any of the officials in charge who are directly responsible or other officials directly responsible fails to maintain confidentiality for the taxpayers, withholding agents or exposure makers in accordance with this Law, such an official shall be subject to administrative sanctions imposed by his working entity or the relevant entity in accordance with the law.

Article 88 If any tax dispute between the tax authority and a taxpayer, withholding agent or tax payment guarantor occurs, the taxpayer, withholding agent or tax payment guarantor must first pay or remit the taxes and the late fee in accordance with the decision on tax payment made by the tax authority, or provide corresponding guaranty, and then after may, apply for an administrative reconsideration in accordance with the law. If they object to the decision made after the administrative reconsideration, they may bring a suit in the people's court in accordance with the law.

Where a party concerned objects to a sanction decision made by the tax authority or to the mandatory measures or measures of taxation by the authority, he may apply for an administrative reconsideration in accordance with the law or bring a suit in the people's court in accordance with the law.

If the party concerned neither applies for an administrative reconsideration of the sanction decision made by the tax authority or brings a suit in the people's court within a prescribed time limit nor complies with the sanction decision, the tax authority which made the sanction decision may adopt the enforcement measures prescribed in Article 40 of this Law, or apply to the people's court for enforcement of the decision.

Chapter VI Supplementary Provisions

Article 89 A taxpayer or withholding agent may appoint a tax agent to handle his tax matters on its behalf.

Article 90 Specific measures on the administration of collection of cultivated land usage tax, deed tax, agricultural tax and animal husbandry tax shall be separately formulated by the State Council.

The administration of collection of customs duty and taxes collected by the Customs on behalf of the tax authorities shall be implemented in accordance with relevant provisions prescribed in laws or administrative regulations.

Article 91 If the provisions of the relevant tax treaties or agreements concluded between the People's Republic of China and foreign countries are in conflict with the provisions of this Law, the relevant matters shall be handled in accordance with the treaties or agreements.

Article 92 If the provisions of the tax laws promulgated prior to the enforcement of this Law are in conflict with the provisions of this Law, the provisions of this Law shall be abided by.

Article 93 The rules for the implementation of this Law shall be formulated by the State Council in accordance with this Law.

Article 94 This Law shall enter into force as of May 1, 2001.

Promulgated by The Standing Committee of the National People's Congress on 2001-4-28