On November 6th, the "Revised Draft of the Tax Collection and Administration Law of the People's Republic of China" (hereinafter referred to as the "Revised Draft") was publicly solicited for opinions. The revised draft consists of 100 articles in six chapters, adding 13 articles, deleting 7 articles, and modifying 75 articles compared to the current Tax Administration Law.

The current Tax Administration Law was introduced in 1992 and comprehensively revised in 2001. It has been in effect for more than 20 years, and its discomfort with current tax collection practices has become increasingly prominent.

The revised draft has made adjustments in natural person tax governance, resolving enforcement dilemmas, and filling the mandatory enforcement system for natural persons. Taking the provision to prevent outbound travel as an example: According to current laws, the legal representative of an enterprise that owes taxes must settle the taxes, late fees, or provide guarantees before leaving the country. Otherwise, the tax authority may notify the outbound management authority to prevent them from leaving the country.

In practice, the legal representative of tax owing enterprises is often a nominal person, and business decisions and asset transfers are actually controlled by the behind the scenes controller, using a nominal name to evade responsibility. Focusing solely on the legal representative is difficult to constrain the true responsible party.

The revised draft will expand the scope of application from "taxpayers and their legal representatives who owe taxes" to "taxpayers with large amounts of unpaid taxes, or their legal representatives, main responsible persons, and actual controllers". This not only expands the scope of application of the law, but also fills the institutional gap, preventing "behind the scenes bosses" from going unpunished.

The relevant person in charge of the Tax Collection and Management Technology Department of the State Administration of Taxation stated that this revised draft will expand the scope of measures to prevent the application of exit measures from the legal representatives of enterprises to key personnel such as the actual controllers of tax arrears enterprises, and lock in the responsible persons for actual control of enterprises, effectively preventing relevant personnel from evading tax recovery by leaving the country.

At the same time, with the deepening development of China's market economy, natural persons' tax related activities have become increasingly frequent, and they have become an important subject of tax governance. For a long time, the tax collection and management system for enterprises and other business entities has been relatively complete. However, in the areas of handling large amounts of tax arrears by natural persons, restraining dishonest behavior, and asset recovery, the system supply is relatively weak, and there are problems such as insufficient regulatory measures and weak rigid constraints. This revised draft has made a series of institutional upgrades in natural person tax collection and management, accurately improving the regulatory and law enforcement system, and standardizing the boundaries of law enforcement operations.

Fan Yong, Dean of the School of Finance and Taxation at Central University of Finance and Economics, believes that some natural persons have long-term and large-scale tax arrears, malicious tax arrears, and other situations. Currently, there is a lack of rigid and effective disposal methods, which not only causes the loss of national tax revenue and damages the order of tax collection and management, but also undermines the fair competition environment for lawful and honest tax payment. At the same time, the current tax collection and management law lacks detailed definition of law enforcement authority and approval processes involving natural persons, making it difficult to adapt to the requirements of precise and prudent supervision in the new situation.

The revised draft not only grants tax authorities the means to collect and manage taxes owed by natural persons, but also adheres to the principles of statutory rights and responsibilities, prudent supervision, and law enforcement for the people. From the three dimensions of amount definition, approval process, and livelihood security, it strictly constrains the power of tax enforcement.

According to Fan Yong, the revised draft includes three "safety valves" in the system design. Firstly, in terms of the threshold for the amount, compulsory enforcement only applies to natural persons who owe a huge amount of taxes, and clear standards will be set for subsequent supporting systems. Secondly, in terms of hierarchical approval, the implementation of compulsory enforcement against natural persons requires approval from the tax bureau at or above the level of a prefecture level city or autonomous prefecture. The approval level is significantly higher than the requirements for compulsory enforcement by enterprises, and arbitrary law enforcement is strictly prohibited from an institutional perspective. Finally, in terms of the red line of rights protection, it is explicitly stated that housing and supplies necessary for individuals and their dependents to maintain their livelihoods are not within the scope of compulsory enforcement and cannot be entered into personal residences for compulsory enforcement; If the tax authorities illegally enforce and cause losses to individuals' legitimate rights and interests, they shall bear compensation liability in accordance with the law.

The revised draft also specifies that individuals should truthfully provide information related to taxation and withholding to tax authorities in accordance with regulations, in order to adapt to the development needs of new business models such as platform economy.

The newly added Article 29 stipulates that Internet platform enterprises shall, in accordance with the law, submit to the tax authorities the identity information, income information and other tax related information of the operators and employees on the platform. Internet platform enterprises shall, in accordance with the relevant provisions of the State, handle tax related matters such as tax declaration of operators and employees on the platform.

Fan Yong said that the direction of this revised draft is very clear, targeting those few lawbreakers who exploit loopholes in the system and evade tax obligations, and they must be made to pay the price. For the vast number of natural persons who pay taxes in accordance with the law, we will achieve 'no risk, no disturbance'. Regulatory measures are imposed on a small number of illegal individuals, while procedural constraints are placed on the exercise of power. This is precisely the necessary duty to promote modernization of tax governance and maintain social fairness and justice.

(Author Du Tao)