The State Administration for Market Regulation and the State Taxation Administration issued a joint circular on August 3, 2021 to clarify matters related to simplified deregistration of enterprises, so that small, medium-sized and micro firms can exit the market more easily.
According to the circular, the scope of simplified deregistration will be expanded to companies that have no creditor's rights or debts such as outstanding expenses for settlement, employee wages, social insurance premiums, statutory compensation, taxes (late fees or fines) payable, etc. All the investors shall make a written commitment to assume legal liability for the authenticity of the above situation. Through information sharing, tax authorities shall verify the relevant tax-related information under the prescribed procedures and requirements. Tax authorities will raise no objection if the taxpayer is shown to fall under any of the following circumstances upon the inquiry system:
- it is a taxpayer that has never handled tax-related matters;
- it is a taxpayer that has handled tax-related matters but has never received or used invoices (including invoices issued on a commission basis), has no tax in arrears or has no other pending matters;
- it is a taxpayer that has completed tax clearance formalities, such as the handing in of invoices and the settlement of tax payable, at the time of inquiry.