Chinese cities desperate for cash are chasing companies for taxes — some from the 1990s

Authorities in cash-strapped Chinese cities are chasing companies for taxes dating back years, and in some cases decades, as they try to plug a hole blown in their finances by the real estate crisis.

Authorities in cash-strapped Chinese cities are chasing companies for taxes dating back years, and in some cases decades, as they try to plug a hole blown in their finances by the real estate crisis. At least eight major listed companies in China have disclosed that they’ve received demands to pay historical taxes, in one case going as far back as the 1990s, in a development that has caused an uproar online and damaged already fragile business confidence. V V Food & Beverage, the country’s largest soy milk producer, said last week that one of its subsidiaries had received a demand for payment totaling 85 million yuan ($11.7 million) from the government of Zhijiang city in the central province of Hubei. The Zhijiang tax bureau said it recently found that the company had failed to file tax returns for 16 years from 1994 to 2009, the company said in a June 12 statement. The beverage maker isn’t the only one to fall foul of the apparent tax crackdown. At least seven other listed companies have reported similar demands over the past few months. In some cases, the companies have had to suspend production and lay off workers because they couldn’t absorb the hefty tax bills and penalties. The crackdown suggests local governments are searching for another way to fill their coffers, as they struggle under mounting financial stress because of a persistent property slump and economic weakness. The authorities have also publicized efforts to work more closely with police to find tax offenders, which has caused even more alarm.