Imechapishwa · Comoros

China Tax Reform in the 15th Five-Year Plan: Key Takeaways for Foreign Founders

China's tax authorities outline reform priorities and economic trends for the 15th Five-Year Plan period. Here's what foreign founders need to know about the tax environment and business climate.

China's Tax Reform Agenda for the 15th Five-Year Plan

At a State Council Information Office press conference on July 28, 2026, officials from the State Taxation Administration (STA) presented an overview of tax reform and development for the 15th Five-Year Plan period. The briefing, part of the "Starting the 15th Five-Year Plan" series, featured STA Administrator Hu Jinglin and other senior officials. For foreign founders establishing or operating a company in China, the details provide a snapshot of the current tax environment and the direction of policy.

Economic Highlights from Tax Data

Tax data for the first half of 2026 reveals several trends relevant to business planning:

• Active business entities: The number of active business entities handling tax matters grew by 20.2% year-on-year, while the number of taxpayers filing returns increased by 10%.
• High-tech and digital sectors: Sales revenue from high-tech industries and core digital economy industries rose by 15% and 8.7%, respectively. Their share of total corporate sales revenue increased by 1.7 and 1.1 percentage points. Profits in high-tech manufacturing and digital product services jumped by 29.2% and 64.4%.
• Foreign investment: The number of foreign-invested tax-registered entities increased by 10.9% year-on-year, and their declared profits rose by 4.5%. Export tax rebates processed for enterprises grew by 7.7%, indicating continued resilience in foreign investment and trade.
• Tax revenue: Total tax and fee revenue reached 16.7 trillion yuan in H1 2026. Tax revenue alone exceeded 10 trillion yuan, up 4.9% year-on-year, driven by stable economic performance and rising producer prices. Social insurance fee revenue was 4.5 trillion yuan, and non-tax revenue was 1.8 trillion yuan.

Building a Unified National Market

A major focus of the 15th Five-Year Plan is the construction of a unified national market. The STA has taken steps to eliminate "hidden fences" that hinder market integration:

• Curbing irregular investment incentives: Tax authorities pushed provinces and municipalities to repeal or amend 833 documents or agreement clauses related to irregular tax incentives for investment. Nearly 160,000 enterprises that had registered outside their actual operating locations to obtain such incentives relocated back, and their tax payments increased by 16% year-on-year in H1 2026.
• Standardizing tax policy application: The STA, along with the Ministry of Finance, regulated over 80 VAT preferential policies in conjunction with the implementation of the VAT Law. It also issued positive and negative lists for compliant tax invoicing (16 items on the positive list, 28 on the negative list) to combat "invoice economy" irregularities.
• Cross-regional tax services: 1.04 million cross-regional tax transactions were processed in H1 2026, up 59% year-on-year. 24,000 taxpayers completed cross-province relocations. The average processing time for cross-regional tax business was reduced by 5 to 10 days, with same-day completion available for eligible cases. Cross-province electronic tax payments exceeded 130 billion yuan, up 39%.
• Unified enforcement: A draft "Tax Administrative Penalty Discretion Benchmark (2026 Edition)" was released for public comment, aiming to unify penalty standards nationwide and clarify minor offenses exempt from punishment.

Tax Compliance and Business Environment

The STA reported improvements in tax compliance and the business environment:

• In June 2026, the self-declaration rate of corporate taxpayers during the filing period reached 98.5%, up 4.5 percentage points from the beginning of the year.
• The 2026 tax payment credit evaluation showed over 47 million entities with good credit standing, up 8.6% year-on-year. Grade A taxpayers numbered 7.88 million, with their share increasing by nearly 7 percentage points.
• Tax authorities promoted the nationwide expansion of occupational injury protection for new forms of employment starting July 1, 2026, benefiting 29.1 million people.

Key Economic Trends: "Real, New, Better, Green"

STA officials summarized H1 2026 economic trends using four keywords:

• Real: Industrial sales revenue grew by 7.1%, with manufacturing up 7.3%. Industrial enterprises accounted for 36% of total corporate sales revenue, up 2.2 percentage points. Industrial equipment investment rose by 9.8%.
• New: Sales revenue from equipment manufacturing, information transmission/software, and science and technology services reached 23.5% of total corporate sales revenue, up 2.2 percentage points, reflecting strong growth in new quality productive forces.
• Better: Profits of 1 million key tax source enterprises increased by 12.8% year-on-year. Total individual income tax declared wages rose by 5%.
• Green: Sales revenue from ecological protection and environmental governance grew by 6.9%. Clean energy power generation (wind, solar, hydro, nuclear) sales revenue increased by 17.1%.

What This Means for Foreign Founders

For foreign entrepreneurs, these developments signal a continued focus on streamlining tax administration, enforcing uniform rules across regions, and supporting high-tech and green industries. The relocation of enterprises back to their actual operating locations and the crackdown on irregular incentives suggest that tax compliance is increasingly important. The expansion of cross-regional tax services and unified penalty standards may reduce administrative burdens for businesses operating in multiple provinces.

Foreign founders should ensure their tax registration and invoicing practices comply with the positive and negative lists. Staying informed about VAT policy changes and credit rating systems can help maintain good standing. The emphasis on high-tech and green sectors may present opportunities for incentives, but careful adherence to substantive operation requirements is essential.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with company registration and operations in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.