Tax arrears: What China’s new measures mean for businesses
As of 1 March 2026, China has introduced new “Measures for the Disclosure of Tax Arrears”, aiming to establish a more transparent and standardised system. Experts from Ecovis explain the five key aspects of the regulation.
The introduction of this new system (Regulation No. 61) marks the first major update since 2005. It strengthens taxpayers’ rights and provides for integration into China’s social credit system.
Clearer definition of tax arrears
Under the new definition, “tax arrears” include not only unpaid taxes (including local education surcharges), but also the following:
- Reported but unpaid taxes
- Taxes unpaid after an extension
- Taxes assessed by authorities (e.g. audits)
Late payment penalties on already paid taxes will also be disclosed, increasing transparency around corporate tax evasion and its associated costs.
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Diversification of announcement channels
Monthly announcements will be published on the administrative law enforcement platform, with additional dissemination via channels such as the e-tax bureau, tax offices, and media. In severe cases, the national tax office may also disclose tax arrears, while provincial tax websites will offer searchable databases including details such as arrears periods, due dates, amounts, surcharges, and identification information.
We are happy to explain the details of the new regulation and support you in addressing the new challenges.
Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Protection of taxpayer’s rights
To protect taxpayers’ rights, confirmations are made three days before publication with opportunities to object, request corrections in advance and amend already published information.
Exclusion of specific scenarios from public announcements
Not all tax arrears will be publicly disclosed. Exceptions include:
- Amounts collected but not yet transferred during bankruptcy
- Arrears arising after legal dissolution
- Unpaid claims under reorganisation or settlement plans
- Cases involving state secrets or other sensitive circumstances
With this, the legislator hopes to avoid unnecessary disruption to companies in liquidation or restructuring.
Links to the social credit system
The new regulation links tax arrears more closely to China’s social credit system, affecting compliance ratings and potentially impacting access to governmental incentives, financing and market opportunities.
What this means for businesses
For businesses, timely and full tax payment should be a top management priority, supported by strong deadline monitoring (including post-filing and extension periods) and a prompt response within the three-day pre-announcement window. Proper documentation for objections, the integration of tax compliance into overall credit risk management to safeguard financing and market access, and proper record-keeping of all relevant tax and dispute documentation are essential.
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