A growing series of Chinese company disclosures is documenting additional taxes and late fees arising from reviews of earlier tax periods, in some cases reducing current-year earnings by hundreds of millions of dollars.
A review published by Beijing-based Chinese financial news outlet Caixin found that 69 listed companies had announced more than 4.9 billion yuan (about $726.2 million) in tax payments, late fees, or penalties as of June 3, compared with fewer than 10 during the same period in each of the previous two years.
The disclosures have continued. Since early June, 22 Shenzhen-listed companies and 20 Shanghai-listed companies disclosed additional tax payments, late fees, or related charges.
One of the largest recent cases involved agricultural producer Beidahuang, which said it was ordered to pay about 1.02 billion yuan in corporate income tax and 386 million yuan in late fees for 2021 through 2025. The combined 1.41 billion yuan (about $209 million) exceeded the company’s entire 2025 net profit, according to its filing.
Businesspeople in China interviewed by the Chinese edition of The Epoch Times described authorities reopening tax treatment previously approved by tax authorities, sometimes years later and under different interpretations. They spoke under a pseudonym or by surname only for fear of retaliation.
The disclosures come as local governments face sharply lower land sale revenue and China’s national tax agency has called for increased scrutiny of key sectors.
‘They Are Checking Taxes Already Paid’
“Tax officials are the busiest people around now,” said Zhou Liqun, a manufacturing executive in Zhejiang Province using a pseudonym. “Every day, they are chasing factories—checking taxes that have already been paid and looking for anything that was missed.”
Zhou told the Chinese edition of The Epoch Times that a friend who manufactures sofas said his company’s accounts could be examined going back 20 years.
“Isn’t that simply robbery?” Zhou said. “He said he was getting out of the business.”
Zhou said companies did not object to paying taxes they legally owed. The problem arose when tax treatment accepted by one group of officials was reinterpreted years later by another.
“When you suddenly demand tens of millions or even hundreds of millions of yuan, you are killing the goose that lays the golden eggs,” he said. “Many companies simply do not have that much cash.”
Ma, an accountant at a company in Fujian Province, said some local tax authorities were requiring businesses to recalculate taxes for prior periods under new standards. Other reviews concerned income that authorities alleged had not been properly reported, he said.
“A lot of these large back-tax payments are not cases in which companies concealed revenue or issued fraudulent invoices,” Ma told the Chinese edition of The Epoch Times.
He said authorities in some areas had also reassessed tax incentives that companies had previously been permitted to claim.
“The tax treatment approved by tax authorities at the time is overturned by today’s inspectors, and then the company sues the tax bureau,” Ma said. “Everything is a mess now.”
Revenue Falls as Tax Scrutiny Increases
Local government revenue from transfers of state-owned land use rights fell 31.5 percent during the first half of 2026, according to China’s Ministry of Finance. Land sales have long been a major source of funding for local authorities.
Private investment in fixed assets fell 8.5 percent during the same period, according to China’s National Bureau of Statistics. Excluding real estate development, it fell 4.9 percent.
At a January national meeting, China’s State Taxation Administration called for increased oversight of key sectors and deeper investigations of major tax cases.
Filings Detail Different Routes to Added Tax Costs
Recent company announcements describe several routes through which businesses incurred additional tax liabilities.
Beidahuang said a tax authority determined that land contracting revenue collected by 16 agricultural branches from family farms did not qualify for a corporate income tax exemption.
The company said it received a formal tax notice covering 2021 through 2025. It expected the resulting taxes and late fees to reduce its 2026 net profit attributable to shareholders by about 1.07 billion yuan (about $159 million).
Among the Shenzhen-listed companies, telecommunications distributor Aisidi disclosed 307.87 million yuan (about $45.6 million) in additional corporate income tax and late fees following a company review. The amount included 123.23 million yuan (about $18.3 million) in late fees and equaled more than 80 percent of the company’s 2025 net profit.
Aisidi said the full amount would be charged against its 2026 earnings.
Other companies described reviews undertaken after instructions or requirements from tax authorities.
Guizhou Wire Rope said it had “recently received notice from tax authorities to conduct a self-inspection of tax-related matters.” The review covered the beginning of 2022 through the end of 2025 and resulted in 22.70 million yuan (about $3.4 million) in taxes and late fees, according to its filing.
Donper Electromechanical said a subsidiary conducted a self-inspection “according to tax department requirements” and paid approximately 35.8 million yuan (about $5.3 million), according to its filing.
Some filings offered no explanation of what prompted the review. Excellence New Energy said a subsidiary adjusted its corporate income tax calculations for 2022 through 2024 after a self-inspection, resulting in 48.37 million yuan (about $7.2 million) in taxes and late fees, according to its filing.
In another case, a subsidiary of Jinkai New Energy paid only 2.39 million yuan (about $354,000) in additional tax but 14.36 million yuan (about $2.1 million) in late fees after receiving a decision on how the relevant income should be taxed. The late fees were more than six times the tax principal, according to its filing.
Chinese listed companies are subject to exchange rules requiring disclosure of material information that may significantly affect their securities prices. Tax-related announcements therefore provide a visible but incomplete record: Comparable matters involving private or smaller businesses generally do not appear in exchange filings.
A Dispute Reaching Back to 2012
A separate case involving Yihai Kerry Arawana Holdings, best known in China for its Jinlongyu cooking oil brand, concerns a tax interpretation that the company is contesting in court.
The dispute involves the treatment of input value added tax related to tax-exempt products at the company’s Dongguan subsidiary, Fuzhiyuan. The underlying transactions date to July 2012.
The subsidiary sought administrative reconsideration and later sued, arguing that the tax authority had erred in its findings and application of the law. It appealed after the court rejected its challenge at the first instance stage.
Yihai Kerry said the ruling was not yet legally effective and maintained that its tax treatment complied with the law. It nevertheless recognized the potential liability under the accounting principle of prudence.
That accounting treatment reduced the company’s 2025 net profit by approximately 472 million yuan (about $70 million), according to its earnings report.
The company said in February that the appeal remained pending.
