Tax Health and Dispute Strategies for Foreign Firms in China

August 4, 2025 Posted by China Briefing Written by Qian Zhou Reading Time: 3 minutes

The latest issue of China Briefing Magazine, “Tax Health and Dispute Strategies for Foreign Firms in China”, is now available as a complimentary download on the Asia Briefing Publication Store.

In this issue:

Chapter 1: Why Tax Health Is a Strategic Priority in China
Chapter 2: Building and Maintaining Tax Health
Chapter 3: Handling Tax Audits and Investigations
Chapter 4: Resolving Tax Disputes and Minimizing Risks

For foreign-invested enterprises (FIEs) operating in China, tax health is no longer just a compliance matter — it has become a critical element of competitiveness. In today’s regulatory environment, businesses that proactively manage their tax affairs are better positioned to reduce risk exposure, access preferential policies, and maintain a constructive relationship with tax authorities.

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Amid ongoing fiscal pressure, China’s tax authorities are sharpening their enforcement tools and tightening compliance oversight. The adoption of advanced technologies, such as big data analytics and the fully digitalized Golden Tax Phase IV system, has enabled precise, real-time monitoring of tax behavior. At the same time, authorities are pushing forward with credit-based tax administration, rewarding compliant taxpayers with significant administrative and financial incentives, while increasing scrutiny of high-risk entities.

This environment places foreign companies under heightened pressure to ensure accurate filings, identify and address red flags early, and document transactions thoroughly. Meanwhile, improperly handled audits or disputes can escalate quickly — resulting in costly penalties, operational disruptions, and reputational damage.

This issue of China Briefing magazine explores how foreign businesses can proactively establish and maintain tax health, navigate audits effectively, and resolve disputes strategically. Drawing on recent policy developments, practical case examples, and expert guidance, we provide a roadmap for managing tax risks in China with foresight and confidence.

In a landscape where tax enforcement is increasingly sophisticated, staying compliant is no longer enough — being proactive is essential.

Chapter summaries:

Chapter 1: With rising fiscal pressure and expanding digital oversight, China is tightening tax enforcement. This chapter explains why maintaining strong tax health is now a strategic priority for foreign firms—impacting audit exposure, access to incentives, and long-term credibility in an increasingly data-driven compliance environment.

Chapter 2: Building and maintaining tax health in China requires robust planning, accurate implementation, and regular reviews. This chapter outlines practical, high-impact strategies that foreign companies can adopt to build a strong, efficient, and low-risk tax position in China.

Chapter 3: Tax audits aren’t just about numbers—they’re shaped by strategy and tone. This chapter explores how thoughtful preparation and constructive handling of audits can protect both compliance and reputation.

Chapter 4: Tax disputes in China can carry serious consequences. This chapter helps companies evaluate when to contest decisions through legal channels and how to reduce exposure during the dispute process.