On 1 November 2026 the National Administrative Penalty Discretionary Standards for Tax Matters (2026 Edition) took effect (State Taxation Administration Announcement No. 20 of 2026, issued 28 September 2026). Where the discretionary standards of the six regions — Northeast, Southwest, Northwest, Central-South, North China and East China — differ from this table, this table governs.

This week we published a short video and a nine-category table of the 66 items, both about which item you should be looking at. This article takes a different angle and deals only with the text: what actually changed, how the 66 items are arranged, how each level is written, and how to read the clause on open cases.

AC Core Highlights

· Discretion changed, not the penalty provisions: this instrument refines and quantifies discretion already granted under existing tax laws, administrative regulations and ministerial rules. It creates no new penalised conduct and changes neither the types nor the ranges of statutory penalties

· One table replaces six: 9 categories, 66 items, five discretion levels (minor, relatively minor, general, relatively serious, serious); item numbers run 1–66 with no gaps

· Not every item has five levels: 18 items have five, 38 have four, 8 have three, 1 has two (item 63), and 1 has a single level (item 59, serious only)

· Social insurance arrears entered the table for the first time: item 30, graded on two dimensions — amount in arrears and its share of the amount payable — with only three levels: general, relatively serious, serious

· 22 items may be exempt from penalty, under two different sets of conditions: 14 first-offence items and 8 items on the minor-violation exemption list; "first offence" means the first within a single calendar year

· Open cases have their own clause: conduct occurring before commencement that has not yet been decided keeps the rules in force at the time, unless applying this announcement is more favourable to the taxpayer

1. What Changed Is Discretion, Not the Penalty Provisions

Start with the layer most often misunderstood: this is neither a new fine nor a heavier one. The official interpretation describes it as refining and quantifying the discretion already provided by existing tax laws, administrative regulations and ministerial rules — it creates no new penalised conduct and does not change the types or ranges of statutory penalties.

That has two practical consequences. First, the type of penalty and its statutory ceiling and floor still come from the substantive provisions; the table settles how much within that range. Second, because nothing new has been created as an offence, there is no retroactive "not penalised before, penalised now" problem — what has been unified is the yardstick, not the obligation.

2. How the 66 Items Are Arranged

The table sorts conduct into 9 categories with continuous numbering, 66 items in all: tax registration 1–10, books and vouchers 11–15, tax filing 16–18, collection of tax and fee payments 19–30, tax examination 31–33, invoices and receipts 34–59, tax guarantees 60–62, tax professional services 63–65, and tax-related information reporting 66.

The item number is the coordinate system for this table. The same action can fall under different items with widely different ranges, so the first step is always locating the item, not calculating the money.

3. Five Levels — and Why Not Every Item Has Five

The five levels are fixed: minor, relatively minor, general, relatively serious, serious. But not every item carries all five. Across the table: 18 items have five levels, 38 have four, 8 have three, 1 has two (item 63), and 1 has only one (item 59, serious).

"Five levels" is therefore a framework, not a quota. Before comparing with what a peer was fined, or with any "standards chart" circulating online, check which item and which level it refers to — otherwise it is easy to apply the wrong one.

Item 16 (failure to file returns and submit filing materials within the prescribed period) does carry all five:

· Minor: no penalty (first offence, corrected in time, no harmful consequences)

· Relatively minor: individuals RMB 50 per instance, capped at RMB 200 in total; entities RMB 100 per instance, capped at RMB 500

· General: individuals RMB 100 per instance, capped at RMB 500; entities RMB 200 per instance, capped at RMB 1,000

· Relatively serious: individuals RMB 500–2,000; entities RMB 1,000–2,000

· Serious: RMB 2,000–10,000

Note the cap built into the first two levels: however many late filings, the total is capped. From "relatively serious" upward there is no cumulative concept at all.

4. Social Insurance Arrears: First Time in This Table

Item 30 covers an employer that fails to pay, or underpays, social insurance premiums within the prescribed period and still fails to pay after the tax authority orders payment within a time limit.

This item enters the discretion table for the first time. Grading uses two dimensions — the amount in arrears (under RMB 500,000 / RMB 500,000 to under RMB 5 million / RMB 5 million and above) together with its share of the amount payable (under 30% / 30% and above). There are three levels, all expressed as multiples:

· General: one times the amount in arrears

· Relatively serious: one to two times

· Serious: two to three times

Three notes. First, this item has no "minor" or "relatively minor" level — do not reason from five. Second, the base of the multiple is the unpaid social insurance premium, not total payroll. Third, entering the table is not the same as entering the penalty provisions — the penalty under the Social Insurance Law has always existed; what changed is how discretion is graded.

5. 22 Items May Be Exempt — Under Two Different Sets of Conditions

Twenty-two items carry a "minor" level and expressly provide for no penalty. They come from two sources with different conditions:

· 14 first-offence items (items 4, 5, 10, 11, 12, 14, 16, 17, 36, 37, 38, 42, 44 and 58): the first occurrence within a single calendar year, minor harmful consequences and timely correction. "First" means 1 January to 31 December of that year, not the first time in one’s life.

· 8 items on the minor-violation exemption list (items 1, 2, 3, 8, 13, 45, 47 and 66): these follow the separate List of Minor Tax Violations Exempt from Penalty, with more specific thresholds — for example, failing to store and keep invoices properly where 25 invoices or fewer are involved — and require timely discovery, correction and no harmful consequences.

Together the two blocks make 22, consistent with the 14 first-offence items clarified in two batches in 2021. But being on a list does not mean exemption is automatic: both sets carry preconditions, and where they are not met the ordinary level assessment applies. Dropping the conditions and saying simply "no penalty" is the easiest sentence to get wrong in client communication.

6. How to Read the Clause on Open Cases

The text reads: where a tax violation occurred before this announcement took effect and the tax authority has not yet made a penalty decision, the rules in force at the time of the conduct apply — unless applying this announcement is more favourable to the taxpayer or fee payer.

Three phrases matter. "Has not yet made a penalty decision" is the dividing line: decided cases fall outside; registered but undecided cases fall inside. "The rules in force at the time" is the default, not an automatic switch to the new table. "Unless more favourable" is an exception, used to argue for the lighter standard in an individual case — not a formula to apply mechanically. Whether the argument can be made, and whether it holds, depends on the facts and the evidence.

7. Four Things a Company Can Do

1. Put item numbers into your internal checklist: copy the five to eight items you actually encounter (filing, books and vouchers, invoice storage and loss, social insurance) into your review list. More useful than memorising the table.

2. Read conditions and levels separately: conditions decide the level, the level decides the amount. Most misjudgements happen at the condition stage, not in the arithmetic.

3. Take stock of open cases: list conduct that occurred before commencement and remains undecided — date, conduct, current status — and assess whether a more favourable argument exists.

4. Make first-offence records self-proving: since "first" is counted within a calendar year, keep records that can show it was the first this year. Otherwise the argument cannot be supported.

How AC Helps

AC has worked with foreign investors in China since 2003; company setup and changes, equity restructuring, non-trade payments and import-export agency are our daily work. If you have an undecided tax penalty matter, or want the items relevant to you turned into an internal comparison sheet, send us the details and we will go through them with you.

Disclaimer: This article is interpreted by AC Consulting for reference only. It does not constitute tax, legal or compliance advice. All implementation standards shall be subject to the latest official documents released by competent authorities.