Rate-paying credit of Chinese enterprises continues to improve

Rate-paying credit is an important measure of an enterprise’s credit. The national rate-paying credit evaluation in 2020 recently released by the State Taxation Administration (STA) shows the positive momentum continued in rate-paying credit. Nearly 30 million enterprises were covered in the evaluation. The number of A-level enterprises among them has grown significantly, B-level and M-level enterprises have seen a stable increase, and the number of C-level and D-level enterprises has continued to decrease.
So far, the rate-paying evaluation has basically covered all corporate taxpayers. Taxation authorities evaluate the credit status of corporate taxpayers every year, and grade them into A, B, M, C, and D levels from high to low. Enterprises rated as A-level in 2020 numbered 1.72 million, 460,000 more than the previous year and an increase of 37 percent, and the proportion of A-level enterprises among all those rated increased by 0.96 percent over the previous year.
The number of B-level and M-level enterprises reached 24.89 million, accounting for 84.67 percent of all enterprises evaluated. Among them, the proportion of B-level enterprises increased by nearly 2 percent, while the proportion of M-level enterprises decreased by 0.83 percent. The number of C-level and D-level enterprises was 2.79 million, nearly 190,000 fewer than last year, and accounted for 9.48 percent of the total number, a decrease of over 2 percent from the previous year and a continuation of what is now a two-year decline.
Zhang Weihua, deputy director of the Taxpayer Service Department of SAT, said that from the evaluation of this year the number and proportion of A-level and B-level taxpayers have further increased, which indicates that taxpayers’ awareness, willingness and ability to pay taxes honestly in accordance with the law are increasing. And it also shows that rate-paying credit management plays an increasingly important role in the construction of the social credit system. 
The rate-paying credit restoration mechanism has been improved at the same time. STA issued a notice in 2019, clarifying that since January 1, 2020, taxpayers who had failed to complete tax declarations, tax payments, information records and other matters within the legal time limit, but now completed them, can apply to the competent tax authority for rate-paying credit restoration within a prescribed period of time. About 700,000 enterprises have upgraded their rate-paying credit level since the implementation of the notice, and nearly 60,000 of them have been upgraded to the A level.
The tax authorities said that companies can still apply for rate-paying credit restoration to the competent tax authority before the end of 2020 to improve their rate-paying credit after the release of the rate-paying credit evaluation result, if they have corrected their failures to comply in 2019.
Zhang also said that the tax authorities will continue to improve the rate-paying credit management system, optimize rate-paying credit evaluation methods, broaden the evaluation results sharing channel in accordance with the central government’s plan to accelerate construction of the social credit system, and build a new tax service management mechanism based on credit to push for high-quality economic and social development.
Source from State taxation administration of the P.R.C.