The ongoing decline in China’s land finance continues, leading to an increase in actions by local Chinese Communist Party (CCP) governments to fill the financial gap. Several business owners and tax experts have informed the Epoch Times that this year, there has been stricter scrutiny of corporate debts, invoices, transactions, and employment records. It is believed that the CCP authorities have managed to funnel billions of yuan into the treasury through retroactive checks on small and medium-sized enterprises, and after tasting the benefits of this approach, they have become addicted to it.
According to the financial data released by the CCP’s Ministry of Finance on May 20, 2026, the national general public budget revenue increased by 3.5% year-on-year in the first four months of the year, with non-tax revenue growing by 13%. However, during the same period, the revenue of national government funds budget reached 1.02 trillion yuan, a decrease of 18.9% year-on-year. The revenue of local government funds budget at the local level was 871.7 billion yuan, down by 22.1% year-on-year. Among them, revenue from the transfer of state-owned land use rights amounted to 680.1 billion yuan, a decrease of 27.2%.
Insiders within the CCP system, such as Mr. Wang Chong (pseudonym), have told reporters that the above data indicates not merely a decrease in local CCP finances but a shift in revenue structure. Wang Chong stated that after the continued shrinkage in land transfer revenue, local governments are now resorting to tax inspections, collection, fines, and non-tax revenue to compensate for the shortfall. He commented, “They are desperate now, conducting tax audits and imposing fines everywhere, setting off a chain reaction of chasing down every possible cent.”
Wang Chong further explained, “In recent months, the tax authorities have increased the treasury inflow through tax inspections, collections, fines, and penalties. Though the full numbers are not disclosed to the public, the scale might already amount to billions of yuan. Retroactive checks and collections show quick results, while fines and non-tax revenue aid in filling the gaps in local finances. Once they get a taste of the benefits, they become addicted and are unlikely to stop in the second half of the year.”
Mr. Liu, a private entrepreneur from Shangrao, Jiangxi, expressed during an interview that tax inspections have become a looming threat for private enterprises. He lamented, “Now the tax authorities are going through the past five years of a company’s accounts. Given the current economic difficulties, it’s evident that these tax inspections aim to increase tax revenue and overall income. Many companies are already struggling with a lack of orders, and these inspections only push them further towards the edge. When businesses shut down, the authorities will lose even more money; it’s a self-defeating approach.”
On April 24, the CCP’s State Administration of Taxation issued a Q&A on invoice compliance, emphasizing the need for consistency in invoicing entities, genuine transactions, contract flows, fund flows, and invoice flows. Additionally, the Taxation Bureau of Tianjin Municipality announced its annual inspection plan for 2026 in February, covering corporate taxpayers, non-corporate taxpayers, and deductors.
On May 22, the taxation authorities exposed eight cases of tax evasion through unauthorized receipts in private accounts, some of which trace back to 2019 and 2020. The State Administration of Taxation also disclosed that Qinghai Dachaidan and Xin Technology Co., Ltd. were pursued for tax evasion and imposed fines totaling 4.5648 million yuan due to concealing income through personal accounts of employees and relatives from 2022 to 2024.
Beijing Municipal Taxation Bureau announced on May 7 that Beijing Xibosi Control Technology Co., Ltd. was fined a total of 11.9693 million yuan for improperly claiming cost expenses, concealing income, and failing to withhold individual income tax as required. These cases illustrate how tax authorities are intensifying investigations through private receipts, income concealment, cost allocation, invoice verification, and individual tax withholding.
An entrepreneur from Zhejiang, known as Mr. Chen, shared with reporters, “Today, the biggest fear for entrepreneurs is having their past scrutinized. Many companies have already relocated to Vietnam or even India. I heard that this time they are targeting some businesses that have moved their factories overseas. They are examining invoices, financial records, and social security payments, as if to warn you about the consequences of relocating your production facilities abroad.”
Several business managers informed reporters that the recent intensification in examining corporate accounts began around March and April this year. Chen added, “Even seeking favors or using connections doesn’t help; unless your company has an annual turnover exceeding 3 billion yuan and is considered a major taxpayer, the local government won’t hesitate to intervene. Companies with tens of millions or billions in revenue are all being scrutinized.”
Some business owners suspect that the so-called “retrospective checks” do not always follow a uniform policy name but are spread across various facets like tax audits, business dissolution and tax settlement, social security collection, invoice verification, individual tax adjustments, and market supervision penalties. Issues such as operational challenges over the past few years, incomplete accounts, insufficient social security payments, and personal account transactions are now back under regulatory scrutiny.
During a press conference on April 24, the Ministry of Finance of the CCP stated that in the first quarter of 2026, non-tax revenues in the country amounted to 1.31 trillion yuan, a 2.9% year-on-year increase. This growth was largely attributed to the surge in revenue from compensated use of state-owned resources, up by 7.5%, mainly due to local authorities exploring multiple avenues to capitalize on assets and an increase in revenues from the disposal, renting, and lending out of state-owned assets by government and administrative units.
Some interviewees perceive that the so-called “nationwide retroactive checks” may appear as tax compliance and administrative law enforcement on the surface, but in reality, they are a way for local CCP governments to diffuse their financial crisis onto enterprises, individual businesses, and residents. With the decline in land finance, it’s no longer solely reliant on land sales and development for revenue; instead, authorities are turning to retroactive inspections of corporate accounts, reviewing individual business transactions, imposing fines, and increasing non-tax revenue, placing significant pressure on small and medium-sized enterprises and individual businesses.