On the Eve of Major Tax Administration Law Overhaul: Personal Assets Subject to Enforcement, Tax Liability Extended to Investors, Risk Chain Lengthens
On 11 2, the draft revision of the Law on the Administration of Tax Collection was submitted for initial deliberation by the Standing Committee of the 14th National People's Congress. The current law was enacted in 1992 and comprehensively revised in 2001; since then, only minor adjustments have been made to individual provisions. This major overhaul consists of 6 chapters and 100 articles, with revisions focusing on four key areas:Refine tax administration measures, standardize law enforcement practices, strengthen rights protection, and improve legal liability frameworks.Note: The full draft has not yet been officially released. The following comparison is based on legislative explanations and authoritative media reports; the final text will prevail once published.
I. Collection and Management Side: Authority Extended to "Individuals" and "Platforms"
1. For individual tax arrears, the tax authority intends to obtain direct enforcement powers.
Under current law, compulsory enforcement primarily targets taxpayers engaged in production and business operations, leaving natural persons with outstanding tax debts without effective measures. The draft proposes that, upon approval, tax authorities may take action against individuals with significant unpaid tax amounts.Coercive measures and enforcement.However, this is not without boundaries. The latter part of the same article establishes three red lines: no entry into private residences; mandatory retention of housing, essential household items, and funds necessary for the livelihood of individuals and their dependents; and approval authority vested at the municipal tax level. These constraints embody the principle of "stability and prudence."
2. The tax cooperation obligations of platform enterprises have shifted from "advocacy" to "legal requirement."
The draft stipulates that internet platform enterprises shall, in accordance with relevant national regulations, handle tax filing and other tax-related matters for business operators and practitioners within their platforms. Supporting this is the authorization of big data management measures for tax affairs: tax authorities are empowered to use big data to conduct risk analysis on the authenticity, accuracy, and completeness of declarations, and to implement management measures commensurate with the level of risk.PlatformifNot fulfilledTax cooperation obligations were also established in the draft.Legal Liability。
3. Tax collection chain extended to "investors"
Current tax recovery laws primarily target the taxpayer themselves. The draft adds: If a shareholder fails to make capital contributions as required, withdraws funds illegally, or deregisters in violation of regulations, and the taxpayer fails or neglects to fulfill their obligations, resulting in the inability to recover taxes,The tax authority may directly recover the amount from the contributor.This further compresses the space where "deregistering a company means taxes are gone."
II. Rights Side: Four "Gates" Close Simultaneously
If the key theme for the administration side is "extension," then for the rights side, it's "capping" and "liberation."
1. Late fees now have a capUnder current law, a late fee of 0.05% per day is imposed with no cap; long-term tax arrears can accumulate penalties far exceeding the principal amount. The draft proposes:Late payment interest on taxes shall not exceed twice the principal amount of tax., and add circumstances under which no additional charge applies.
2. No need to pay upfront for reconsiderationThe "tax payment prerequisite" in Article 88 of the current law has long been considered the biggest barrier to tax dispute relief—without paying the full tax or providing security, taxpayers cannot even file for reconsideration. The draft proposes eliminating this prerequisite, allowing taxpayers to directly apply for administrative reconsideration in tax disputes.No longer contingent on tax payment or provision of a guarantee。
3. Tax-related information now has purpose locking.The draft clarifies that tax authorities and tax officers must strictly keep tax-related information confidential and may not use it for purposes other than tax administration.
4. Incorrect declaration; can be corrected.Draft adds general provisions for amended returns: taxpayers and withholding agents who discover errors in their filings may submit corrections within the prescribed time limits and using the prescribed methods.Corrective Declaration。
III. Point-by-Point Comparison: Current Law vs. Proposed Draft
1. Enforce against individualUnder current law, compulsory enforcement primarily targets taxpayers, withholding agents, and tax guarantors engaged in production or business operations. There is a lack of effective measures for handling tax arrears by individuals. The draft proposes that for individuals with significant tax arrears, compulsory measures and enforcement may be implemented upon approval by a tax authority at or above the prefecture level. However, personal residences shall not be entered, and housing, essential household items, and living expenses required for basic subsistence must be preserved.
2. Platform's tax compliance obligationCurrent law does not statutorily mandate this. The draft proposes to clarify that internet platform enterprises must handle tax declaration and other tax-related matters for business operators and personnel within their platforms in accordance with national regulations, and establish corresponding legal liabilities for non-compliance.
3. Recover from the contributorCurrent law contains no explicit provision. The draft proposes that where a shareholder fails to make capital contributions in accordance with the law, withdraws funds illegally, or deregisters in violation of regulations—resulting in uncollectible tax payments—the tax authority may directly collect from the shareholder.
4. Late fee capCurrent law imposes a daily penalty of 0.05% on overdue taxes with no cap. The draft proposes capping the penalty at twice the amount of tax owed and adds scenarios where penalties will not be applied.
5. Pre-requisite for tax clearance in reconsiderationCurrent law requires taxpayers to pay the disputed tax or provide a guarantee before applying for administrative reconsideration. The draft proposal seeks to remove this prerequisite, allowing direct application for administrative reconsideration.
6. Purpose of Tax-Related InformationCurrent law adopts the principle of relativity. The draft proposes to clarify that tax-related information must be kept strictly confidential and shall not be used for purposes other than tax administration.
7. Corrected DeclarationThe current law contains no general provision. The draft proposes adding a rule allowing corrections to be made within the prescribed time limit and in the prescribed manner after an incorrect declaration is submitted.
4. Key Practical Signals to Watch
For enterprises and tax professionals, the signal sent by this revision is more significant than the provisions themselves.
First, the window of opportunity for compliance is narrowing.Once big data risk analysis and platform tax compliance obligations are implemented, tax authorities will gain significantly greater visibility into transaction chains. The "gray areas" that relied on information asymmetry will only shrink further.
Second, cancellation isn't the end.The shareholder capital contribution clause extends the tax liability chain for enterprises during establishment, capital reduction, and deregistration. The tax costs of exiting the market must be factored into decisions at the earliest stage.
Third, terms and conditions are meant to be used.Late fees are capped, reconsideration is relaxed, and amended filings are permitted. These provisions only matter when actually invoked. Knowing they exist is different from using them during a dispute.
Fourth, the draft is still in its first reading.Provisions may still be adjusted; a line-by-line comparison after the full text is published will establish the final version. This amendment aims to balance giving tax authorities more effective tools with providing taxpayers stronger procedural safeguards. As tools become more powerful, boundaries become clearer. For market entities, understanding these boundaries is more valuable than fearing the tools.
This article is based on reports and legislative explanations from the National People's Congress website regarding the first review of the draft amendment to the "Law on the Administration of Tax Collection," Xinhua News Agency's press release dated 2026/11/2, CCTV's "Morning News" report on 2026/11/3, China News Service's report on 2026/11/2, interviews and analysis by Li Xuhong and Shi Zhengwen from China National Radio, and related coverage from the Legal Daily (reprinted by Guangming Net). The full draft has not yet been officially released. Future updates will be available through the "Draft Law for Public Comment" section on the National People's Congress website. Provisions are subject to the final official text. This article does not constitute legal advice.