With the full launch of the “Golden Tax Phase IV” system, the tax supervision under the Chinese Communist Party (CCP) is entering a “strict control moment” of precise data management and thorough investigation of personal income taxes. Following the tightening storm of corporate tax audits, individual income taxes are gradually becoming a new focus for revenue authorities. A recent case reported by the Zhejiang Tax Bureau revealed multiple instances of individuals underreporting personal income, indicating that the scrutiny of personal income has expanded from high-income groups to ordinary employees, shifting the tax focus from “checking corporate accounts” to “checking individual accounts.”
The Zhejiang Provincial Tax Bureau announced on October 6th that a taxpayer, while working in several companies in Shenzhen and Chongqing, received a total income of over 580,000 yuan in salary but failed to file annual income tax returns as required by law and submitted false information for special deductions. The taxpayer was eventually required to pay back taxes and fines totaling 36,773.88 yuan. The announcement clearly stated, “Actions such as falsely reporting annual income, not conducting annual income tax settlement, and falsely reporting special deductions will be inspected and dealt with according to the law.”
A businessman in Zhejiang, using the pseudonym Zhang Da, told reporters, “Previously, the focus was on checking corporate accounts, but now both businesses and individuals are being scrutinized together. Tax evasion by companies, tax avoidance by individuals, salary splitting, and concealed remuneration can all be cross-referenced within the system. In the past, I used to underreport salaries and provide more subsidies to help workers earn more actual income, but now it’s closely monitored.”
Since the official operation of the “Golden Tax Phase IV” system, mainland China’s individual income tax data has been interconnected and shared with social security, housing funds, bank transactions, employment records, and other data. Tax authorities can utilize algorithm models to automatically identify multiple income sources, abnormal reporting, and false special deductions, forming a three-dimensional regulatory framework of “checking people and businesses together.”
Tax systems in multiple regions have also issued notifications that starting in 2025, annual income tax settlement for individuals will be a key focus of inspections. The target groups include individuals who receive salaries from two or more units, those with both individual business and employee statuses, those who falsely report deductions for children’s education or housing loans, and individuals who hold positions in multiple companies or receive consultancy fees and project rewards.
Mr. Zhou, a financial and tax advisor in Hangzhou, pointed out, “The stricter the corporate tax inspections become, the less room there is for individuals to avoid taxes. In the past, companies could pay on behalf of or reimburse some income, but now such operations cannot escape the system.”
Miss Zhang, a former accountant at Huawei, disclosed to reporters that with the enhanced automatic cross-referencing function of the Golden Tax Phase IV, tax compliance would directly affect loans, bidding processes, and personal credit reports. She stated, “This is no longer just a tax management issue but an extension of the credit system. I’ve heard from colleagues that tax authorities almost visit company premises every month, putting immense pressure on businesses.”
In recent months, the CCP Tax Administration has reiterated multiple times that annual income tax settlement is a legal obligation for citizens. Those who fail to truthfully report or underpay taxes may face penalties or administrative sanctions in addition to making up for the tax shortfall.
An official in Jinan, Shandong Province, revealed to reporters that due to tight local finances, tax authorities are implementing a policy of “strict collection and management.” He stated, “Look, with the current downturn in the real estate market, tax officers are constantly questioning developers about when properties will be sold because they need to meet their targets. They have to find tax revenue elsewhere.”
Industry analysts suggest that in recent years, local governments, in order to “preserve finances and ensure stability,” have been moving towards comprehensive tax collection and management. Especially scrutinizing individual income tax for high-income individuals, flexible employees, and those with multiple sources of income has become a crucial tool for stabilizing local finances.
A real estate developer residing in Malaysia, Mr. Yang, commented to reporters, saying, “The government is establishing a personal tax credit system, incorporating the tax situations of every individual into their credit records, aiming to promote the so-called ‘nationwide tax compliance.’ They are skilled in this area and have political motives as well.”
Analysts point out that the advancement of the Golden Tax Phase IV not only signifies technological upgrades but also marks a shift in the CCP’s tax governance logic, extending from corporate supervision to personal financial monitoring.
Some viewpoints suggest that this shift from “checking accounts” to “checking personal accounts” is actually a product of concurrent financial pressures and political risks. During economic downturns and high local debts, governments require more precise “data tools” to maintain income and stability. The establishment of the “tax credit” system, on the surface, appears to be modern governance but could potentially become a tool for monitoring personal wealth movements and social behaviors.