Three fruit export companies in Shenzhen are being pursued to repay taxes and fines totaling 12.3 million RMB (Chinese Yuan) and have been banned from processing export tax refunds for three years, according to recent reports. Additionally, the listed company Beidahuang (Heilongjiang Beidahuang Agricultural Co., Ltd.) has been subjected to additional taxes, with individual taxpayers in old debt being investigated and pursued for taxes, sparking fear among many business owners about taxation and business prospects under the Chinese Communist Party’s scrutiny.
The tax authorities of the Chinese Communist Party stated that the three companies reported fruit export revenues of 527 million RMB, but actually received less than forty percent in actual foreign exchange earnings. The reported costs approached 500 million RMB, with only around 200 million RMB in input invoices obtained. Inspectors also discovered overlapping invoice issuers in the upstream chain, with some funds being transferred back to personal accounts of enterprise-related individuals through multiple layers of accounts. Discrepancies between export, invoicing, and collection records became key clues in the investigation.
A businessman named Chen Hong (pseudonym), who had previously engaged in fruit trade in Xinhui, Guangdong, told Epoch Times that fruit is perishable and can easily spoil, often requiring strict timing; any slight delay can result in losses. He expressed, “Now it takes two to three months to receive payment. When exporting fruits, sometimes the goods go out first, and the money comes later, and sometimes I have to ask other companies to collect payments. The fined fruit wholesale companies reported over 500 million, with invoices differing by 300 million. Companies need to provide contracts, shipping, and payment records, and sometimes the tax authorities don’t need your records, and then suddenly they do. Isn’t this a matter of life and death?”
Alongside the Shenzhen case, another video circulating claims that the listed company “Beidahuang is being investigated for additional taxes exceeding 1 billion,” marking the beginning of a new wave of supplementary taxation. Another video lists three types of fund transfers subject to “key monitoring”: large cash deposits, large transfers between enterprises and individuals, and substantial transfers between personal accounts. The video warns against splitting funds into multiple transfers or making consecutive transfers close to specific amounts.
A businessman from Xi’an named Mr. Hua told reporters that many companies had to close down due to sudden retroactive tax inspections: “Many shops and companies here have closed down. The Communist Party has gone crazy now. They are killing the goose that lays the golden eggs. The urban management fines, the tax bureau audits, if your financial records from last year were fine, they will look at the year before, and if that’s fine, they will dig even further back, making it impossible for anyone to continue.”
Another video on WeChat reveals that an individual who had been in business for 15 years without reporting taxes received notices for supplementary taxes and fines totaling over 780,000 RMB; and another screenshot lists errors in bookkeeping, issuing fake invoices, administrative fines, and the statute of limitations for criminal prosecution all on the same page. In the comments section, someone wrote, “No wonder companies are moving away,” “Isn’t the late payment not supposed to exceed the principal amount?” “Speed it up.”
Mr. Wang, a Guangzhou scholar familiar with corporate finance and taxation, stated that from a financial and tax professional perspective, what businesses fear most is excessive enforcement by local governments under financial pressure: “In many places, due to insufficient land revenue, grassroots law enforcement has become ‘non-tax revenue-oriented.’ For individual taxpayers, being found owing 780,000 RMB after 15 years of non-compliance is legally punitive; however, with many companies facing existential crises, if ‘selective law enforcement’ with wide-spread, retroactive inspections is carried out to fill financial gaps, it is essentially killing the goose that lays the golden egg.”
Netizens commented that small and medium-sized enterprises provide a large number of jobs, and if a large-scale closure occurs, it will not only affect business owners, but also employees and families. Mr. Wang stated that many people express dissatisfaction with the selective law enforcement by tax authorities through the internet; if tax departments continue focusing on digging into old accounts excessively, raising compliance costs for companies to unaffordable levels, the ultimate result will be a depletion of resources.