According to China's First Financial Daily, during a spot check conducted by the State Administration of Taxation, 12 Chinese companies were found to be involved in illegal tax practices.
Ten these companies are said to be financial companies and two are power enterprises. Of these, a branch of Shenzhen Development Bank in the Pearl River Delta region did not pay the enterprise income tax on a bonus received from the government. Several branches of China CITIC Bank's did not deduct income tax before paying interest to overseas loans. The Bank of Communications did not list certain expenditure items for tax. In addition, some companies including CITIC Bank, China Life Insurance Company, and affiliates of Huadian avoided paying personal income tax for their employees by increasing welfare payments such as transportation and communication fees for their employees.
An official from SAT said that these companies would be severely punished and they may be fined from 0.5 to five times the amount of tax involved.
Since April, SAT initiated a campaign and asked 24 large enterprises to conduct an internal audit of their tax status between 2005 and 2007. SAT spot-checked companies that had found problems during internal audits.
In the first half of 2009, China collected a total tax payment of CNY2,593.007 billion, which was a decrease of 6% compared with the same period of the previous year.
