According to a report by China Daily on March 5…
China is stepping up fiscal governance efforts as part of a broader push to build a unified national market and foster higher-quality economic growth, according to new data released by the State Taxation Administration.
Authorities said that in 2025 they intensified enforcement against irregular tax practices linked to local investment incentives, an issue long associated with regional competition to attract businesses. A total of 389 suspected violations were investigated during the year, with confirmed cases swiftly corrected.
Analysts say the campaign reflects Beijing’s determination to curb what policymakers often describe as “involution-style competition” among regions — a practice in which local governments offer preferential tax arrangements or overlook irregularities in order to draw investment.
Xu Sheng, a researcher at the economic research institute of the National Development and Reform Commission, said the effort aims to restore a level playing field for businesses.
“Such practices distort market order and undermine fair competition,” Xu noted, adding that stricter enforcement helps protect compliant enterprises and improve the overall business environment.
Bridging the Online–Offline Tax Gap
Regulators also moved to close loopholes associated with the rapid growth of the digital economy. New rules introduced last year require internet platforms to strengthen tax information reporting.
More than 8,000 online platforms are now complying with the new reporting requirements, authorities said. The system is designed to overcome the long-standing gap between companies’ registered business locations and their actual operational bases — a mismatch that had previously enabled some fraudulent transactions and tax evasion.
Faster Cross-Regional Tax Services
China also made progress in simplifying tax administration for companies operating across provinces.
According to the tax authority, the average processing time for cross-regional tax services has been reduced by five to 10 days. Cross-provincial electronic tax payments reached more than 130 billion yuan ($18.8 billion) in 2025, marking a 39 percent year-on-year increase.
The improvements are expected to reduce administrative costs for businesses and facilitate the smoother movement of capital and labor across regions — a key objective in China’s effort to build a unified national market.
For investors and multinational companies operating in China, the strengthened compliance framework signals a broader policy trend: tighter regulation of local protectionism alongside continued efforts to standardize market rules nationwide.