First, let's look at a few sets of data:<\/p>\n\n\n\n
4,976 businesses issued invoices in violation of regulations to claim tax credits, thereby evading taxes 10.935 billion<\/strong><\/p>\n\n\n\n 20 Companies Evaded Value-Added Tax and Other Taxes in the Export Process 41.47 million<\/strong><\/p>\n\n\n\n Local Tax Authorities Overcharge or Collect Taxes and Fees in Advance 40.4 billion<\/strong><\/p>\n\n\n\n Bank of China Engages in \u201dPadding the Ranks\u201d to Disguise Private Funds as Public Funds to Evade Income Tax 2.367 billion<\/strong>, as stated by the National Audit Office: \u201dImproperly exploiting preferential financial policies for personal gain\u201d<\/p>\n\n\n\n Cross-border workers reading this might be tempted to scroll past\u2014\u201dWhat does this have to do with me?\u201d<\/p>\n\n\n\n The Bank of China\u2019s maneuver involving 2.367 billion and the logic behind your Hong Kong company\u2019s \u201d95% profit retention in Hong Kong\u201d scheme are essentially the same thing: policy arbitrage that crosses the line.<\/strong><\/p>\n\n\n\n To put it simply, it's very straightforward.<\/p>\n\n\n\n Income from the spread between stock and bond prices earned by publicly offered funds is exempt from corporate income tax under the regulations\u2014this policy was originally intended for publicly offered funds that cater to the general public and attract retail investors. Private funds? They don\u2019t qualify.<\/p>\n\n\n\n How did the Bank of China pull this off? They enlisted two subsidiaries to act as conduits, rounded up a large number of their own employees to \u201dmake up the numbers\u201d\u2014with each contributing between 1 and 100 yuan\u2014and forcibly disguised 11 private equity funds as \u201dpublicly offered funds.\u201d Once they had enough participants, they simply changed their status,2.367 billion in taxes were saved.<\/strong><\/p>\n\n\n\n The National Audit Office places great emphasis on characterization:Deception, concealment, and false reporting.<\/strong> Under Article 201 of the Criminal Code, this is the minimum penalty for tax evasion.<\/p>\n\n\n\n Translated into plain language:Policy incentives are meant to help you do the right thing; if you use them as a tool for arbitrage, no one can help you.<\/strong><\/p>\n\n\n\n There is a passage in the audit report that is easy to overlook:\u201cTwenty companies evaded 41.47 million yuan in value-added tax and other taxes related to exports.\u201d<\/strong><\/p>\n\n\n\n The amount may not seem large, but the National Audit Office specifically listed it separately\u2014Exports will be the focus of the next phase.<\/strong><\/p>\n\n\n\n Even harsher measures were outlined in the rectification report: the State Taxation Administration and the General Administration of CustomsAdded more than 20 new data-sharing items<\/strong>, thanks to this coordinated effort, more than 71 billion has been recovered, and more than 800 people have been dealt with.<\/p>\n\n\n\n What does this mean for cross-border sellers? The old practice of keeping three sets of books\u2014one for customs declarations, one for platform sales, and another for payments received in Hong Kong\u2014is essentially a thing of the past:<\/p>\n\n\n\n Starting in October 2025<\/strong>, Amazon, Temu, and TikTok Shop report Chinese sellers' identities, transactions, and revenue directly to the tax authorities on a quarterly basis,Issue an alert if the difference exceeds 5%<\/strong><\/p>\n\n\n\n The tax authorities can now see customs declarations, declared values, and HS codes at a glance.<\/p>\n\n\n\n Full Implementation of the Chinese Version of CRS 2026; Automatic Reporting of Hong Kong Account Information<\/p>\n\n\n\n A while back, there was a seller in Shenzhen whose Hong Kong-based company received payments from Amazon but didn\u2019t repatriate the dividends. The tax authorities used the CRS to track them down, and they caught every single one,Pay back taxes plus a fine of 4.8 million.<\/strong> This is not an isolated case.<\/p>\n\n\n\n The Bank of China fabricated its status as a public offering by \u201dpadding the numbers.\u201d<\/p>\n\n\n\n What does \"cross-border circle\" refer to?\u201cMainland companies do the work, while Hong Kong companies rake in the profits.\u201d<\/strong>\u2014And it stayed down for 95%.<\/p>\n\n\n\n The OECD's FAR model for transfer pricing is clearly laid out; according toFunctions\/Assets\/Risks<\/strong>Three-tier classification:<\/p>\n\n\n\n Your mainland company handles procurement, operations, customer service, and after-sales support, while your Hong Kong company has just one bank account for receiving payments\u2014In the FAR model, this is a \u201dpure payment collection platform,\u201d with a profit cap of 3%.<\/strong><\/p>\n\n\n\n Would you dare tell the tax authorities, \u201dMy Hong Kong company earned 95% profits because\u2026\u201d? The words are on the tip of your tongue, but you can\u2019t even make sense of them yourself.<\/p>\n\n\n\n Now let\u2019s take a look at the new game-changing moves for 2026:Golden Tax Phase IV + Platform Reporting + Customs Data + CRS: Cross-checking of these four sets of data.<\/strong> The tax authorities keep a clearer track of your total sales, refunds, and remaining profits than even your own accounting department does.<\/p>\n\n\n\n Don\u2019t delude yourself into thinking, \u201dThe National Audit Office is targeting banks and tax authorities\u2014it has nothing to do with me.\u201d The fact that the report was released at this juncture\u2014as the 14th Five-Year Plan comes to a close and the 15th Five-Year Plan begins\u2014is in itself a warning to the entire industry:Tax cuts \u2260 regulatory relaxation; policy incentives \u2260 arbitrage tools.<\/strong> If they dare to single out a major state-owned bank like the Bank of China, private enterprises certainly shouldn\u2019t count on getting off scot-free.<\/p>\n\n\n\n If you're working on an architecture, quickly check these five points:<\/strong><\/p>\n\n\n\n 1. Do Hong Kong companies have a physical presence?<\/strong> Do the employees, office, decision-making records, and bank statements all match up? It\u2019s a pure shell company\u2014there\u2019s a high probability it will be subject to a\u7a7f\u900f review this year.<\/p>\n\n\n\n 2. Transfer Agreement<\/strong>Price Retention Document<\/strong> \u2014 How much in service fees do mainland companies charge Hong Kong companies? Refer to the FAR for guidance, and quickly adjust arbitrary rates like 15% to the industry\u2019s fair range of 3%\u20135%.<\/p>\n\n\n\n 3. \u201dThree-Stream Alignment\u201d in Export Tax Rebates\u201d<\/strong> \u2014 If there are significant discrepancies in customs declaration amounts, platform sales, or foreign exchange receipts, address them yourself first\u2014don\u2019t wait for an alert to be triggered.<\/p>\n\n\n\n 4. Don't touch it<\/strong>The \u201dTax Planning\u201d Scheme Involving Tax Haven Rebates and Fiscal Refunds\u201d<\/strong> \u2014 The National Audit Office\u2019s report specifically highlighted \u201dtax planning that exploits tax havens, resulting in abnormally low actual tax burdens\u201d\u2014and that\u2019s the next blow.<\/p>\n\n\n\n 5. Previously used personal PayPal\/Wanlihui accounts to privately receive payments from the platform<\/strong>... Make sure to record these transactions in the company's books immediately. The bank and tax data systems are now integrated, so frequent, large-amount transfers from personal to business accounts will trigger an alert.<\/p>\n\n\n\n If you have any questions, please feel free to contact us:Cell phone: 18676749275<\/strong> \uff5c WeChat: qcygscszk<\/strong><\/p>\n\n\n\n Here\u2019s a harsh truth: It used to be \u201dif you got caught, it was your bad luck,\u201d but now it\u2019s \u201dif you haven\u2019t been caught yet, it\u2019s just because your turn hasn\u2019t come up yet.\u201d Out of the 72.6 billion in tax revenue lost due to collaborative tax administration, 71 billion has already been recovered through corrective measures\u2014just think about that efficiency.<\/p>\n\n\n\n The cross-border e-commerce industry has moved past the stage where \u201dreckless inventory dumping, gray-market funds, and Hong Kong shell companies\u201d were enough to guarantee success without much effort.Compliance isn't a cost\u2014it's a lifeline.<\/strong><\/p>\n\n\n\n With that 2.367 billion case involving the Bank of China right there, you have no choice but to believe it.<\/p>\n\n\n\n If you\u2019re wondering: How much of a Hong Kong company\u2019s profits should be distributed? Should the corporate structure be adjusted? How should transfer pricing documentation be prepared? \u2014 Qicaiying specializes in global financial and tax compliance for cross-border e-commerce, offering services ranging from the substantive operations of Hong Kong companies, ODI filings, and transfer pricing documentation to CRS compliance, providingCan be implemented and stand up to scrutiny<\/strong>A one-stop solution.<\/p>\n\n\n\n It\u2019s much less costly to conduct an architecture health check upfront than to wait for alerts to come in and then take corrective action.<\/p>\n\n\n\n If you have any questions, please feel free to contact us:Cell phone: 18676749275<\/strong> \uff5c WeChat: qcygscszk<\/strong><\/p>\n\n\n\n On June 23, as soon as the National Audit Office\u2019s 2025 audit report was released, the finance community was abuzz, while the cross-border community remained quiet.<\/p>\n \u4f46\u4e8b\u5b9e\u662f\u2014\u2014\u8fd9\u56de\u6328\u677f\u5b50\u7684\u867d\u662f\u94f6\u884c\u548c\u7a0e\u52a1\u5c40\uff0c\u4e0b\u4e00\u68d2\u5927\u6982\u7387\u5c31\u8f6e\u5230\u54b1\u4eec\u3002<\/p>\n First, let's look at a few sets of data:<\/p>\n 4976\u6237\u4f01\u4e1a\u8fdd\u89c4\u5f00\u7968\u62b5\u6263\uff0c\u5077\u9003\u7a0e\u6b3e\u00a0109.35\u4ebf<\/p>\n 20\u6237\u4f01\u4e1a\u51fa\u53e3\u73af\u8282\u5077\u9003\u589e\u503c\u7a0e\u7b49\u00a04147\u4e07<\/p>\n \u5730\u65b9\u7a0e\u52a1\u90e8\u95e8”\u8fc7\u5934\u7a0e\u8d39”\u591a\u5f81\u63d0\u524d\u5f81\u00a0404\u4ebf<\/p>\n \u4e2d\u56fd\u94f6\u884c\u641e”\u51d1\u4eba\u5934”\u628a\u79c1\u52df\u5305\u88c5\u6210\u516c\u52df\u9003\u6240\u5f97\u7a0e\u00a023.67\u4ebf\uff0c\u5ba1\u8ba1\u7f72\u539f\u8bdd\uff1a”\u4e0d\u5f53\u5229\u7528\u91d1\u878d\u4f18\u60e0\u653f\u7b56\u725f\u5229”<\/p>\n Cross-border workers reading this might be tempted to scroll past\u2014\u201dWhat does this have to do with me?\u201d<\/p>\n The Bank of China\u2019s maneuver involving 2.367 billion and the logic behind your Hong Kong company\u2019s \u201d95% profit retention in Hong Kong\u201d scheme are essentially the same thing: policy arbitrage that crosses the line.<\/p>","protected":false},"author":10,"featured_media":8959,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[1469],"class_list":["post-11693","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry","tag-23-67"],"yoast_head":"\nI. How Exactly Did the Bank of China Fall?<\/strong><\/h2>\n\n\n\n
II. What Cross-Border Workers Should Be Worried About Isn\u2019t the 10.9 Billion, but the 41.47 Million<\/strong><\/h2>\n\n\n\n
III. Is Your Hong Kong Company a \u201dReal Entity\u201d or a \u201dShell Company\u201d?<\/strong><\/h2>\n\n\n\n
What Hong Kong Companies Actually Do<\/strong><\/td> Potential Profit Range<\/strong><\/td><\/tr> Purely a collection and payment service\u2014no staff, no office<\/td> \u22643%<\/td><\/tr> Handles administrative and financial tasks, including processing documents<\/td> 5%-10%<\/td><\/tr> Has a sales team + pricing authority<\/td> 15%-30%<\/td><\/tr> End-to-End Solutions for Sourcing, Sales, and R&D + Branding\u2014We Assume All Risks<\/td> 50%+<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n IV. Five Self-Assessment Checklists for Cross-Border Business Owners<\/strong><\/h2>\n\n\n\n
![\"\"](\"https:\/\/qcyboss.oss-cn-shenzhen.aliyuncs.com\/wp-content\/uploads\/2026\/03\/20260323160847384.jpg\")
<\/figure>\n\n\n\nconcluding remarks<\/strong><\/h2>\n\n\n\n
Enterprise Finance Group<\/strong><\/h2>\n\n\n\n
<\/figure>","protected":false},"excerpt":{"rendered":"