China’s Tax Authorities Target Closed Small Businesses

Videos circulating recently on Chinese social-media platforms, including WeChat and Douyin, indicate that tax inspections, previously focused on larger companies, are increasingly extending to individual businesses.

In one case in Jiangxi Province, a business owner whose individual business had been deregistered was ordered to have the tax registration forcibly reinstated and submit to an inspection. A notice circulating online said the local tax bureau had determined that the business had failed to declare taxable income accurately.

The notice stated that the bureau would require the individual to undergo an inspection within five working days and provide supporting documentation for costs and expenses.

The reports have fueled concern among business owners that a closed business can still be subject to new tax audits, according to several individuals in China’s business sector who spoke to The Epoch Times on condition of anonymity out of fear of reprisal.

A self-employed business owner in Nanchang, China, surnamed Shi, told the publication that a fellow business owner who had closed a breakfast business was contacted by tax authorities about the business’s historical income.

“This is too much,” Shi said. “He canceled the business license [because] he can’t keep it going. The store was also transferred to someone else. The tax bureau has retained transaction records from platforms and bank collection records, and the tax bureau now wants to examine his income and make him pay additional taxes. He had paid taxes every year. What is this if not robbing people of their money?”

A WeChat video blogger claimed that hundreds of individual businesses in Jiangxi Province had recently had their tax registrations restored and were being summoned for questioning. Jiangxi tax authorities have not publicly confirmed the claims.

The Epoch Times cannot independently verify the claims.

A former individual business owner in Hunan Province told The Epoch Times that many small merchants have already withdrawn from the market and that some are now facing scrutiny of their old accounts.

“The tax bureau has recently been checking the old accounts of individual businesses,” he said. “They previously checked listed companies, then small and medium-sized enterprises, and now it’s the turn of individual businesses.”

The Chinese regime has not publicly disclosed how many individual businesses are being audited, how many regions are involved, or how much additional tax has been collected. The available accounts therefore leave open whether the reported cases represent isolated enforcement actions or part of a broader effort to collect taxes from businesses that have already closed.

The reported tax reviews have generated backlash on Chinese social media, with critics saying small businesses are already struggling with weak demand and declining incomes.

Some Chinese netizens have linked the reported inspections to the country’s broader economic slowdown and the growing fiscal pressure facing local governments.

Ye Zilong contributed to this report.