Key highlights of the measures for the administration of tax payment credit

The Measures establish a clear mechanism for assessing taxpayers’ credit standing, relying on data such as the timeliness and accuracy of tax filings, punctuality in payments, compliance with relevant tax laws, and adherence to required reporting obligation​​s. Based on these indicators, taxpayers are classified into credit rating categories ranging from “A” (highest), B, M, C to “D” (lowest).

Taxpayers with higher credit ratings enjoy preferential treatment, including simplified tax procedures and expedited administrative approvals. Conversely, taxpayers with lower credit ratings are subject to closer scrutiny, potential exclusion from tax incentives, and increased audit frequency.

The Measures emphasize the integration and sharing of data between tax authorities and other relevant government bodies to ensure consistent and accurate assessments. Credit ratings will be disclosed on official platforms, enhancing transparency and allowing stakeholders to assess the compliance status of counterparties.

Taxpayers are granted the right to appeal their credit evaluation results within a prescribed period. The Measures include a structured mechanism for both appeal and credit restoration, enabling taxpayers to actively correct deficiencies and improve their rating.

The Measures outline the responsibilities of both tax authorities and taxpayers. Misconduct such as fraud or evasion will result in penalties, including credit downgrades and other legal consequences, thereby reinforcing the credibility and deterrent power of the system.

The official notification is accompanied by 6 detailed annexes, which provide a granular classification of various types of non-compliant behavior and the corresponding credit point deductions. These attachments also clarify the specific conditions under which taxpayers may restore lost credit points and define circumstances that trigger a direct downgrade to the lowest credit level (“D”). Notably, the framework specifies four time brackets for credit restoration: within 3 days, 4–30 days, 31–90 days, and beyond 90 days. The sooner a taxpayer rectifies non-compliant behavior, the higher the proportion of points that can be restored—emphasizing the incentive for prompt corrective action.

The introduction of this formalized credit rating system underscores the Chinese government’s focus on strengthening tax compliance and improving transparency. Enterprises operating in China should proactively monitor and manage their tax credit profile to leverage administrative efficiencies and access available preferential policies. Failure to maintain a satisfactory rating may result in reputational risk, delays in business processes, and increased compliance costs.

As these Measures represent a significant regulatory development, we are closely monitoring their implementation and practical implications. While some aspects may still evolve through interpretation and application, we are available to support enterprises in understanding the framework, identifying potential compliance risks, and engaging in dialogue with tax authorities where appropriate.