China's anti-tax evasion campaign is spreading through the A-share and Hong Kong stock exchanges, with at least 80 publicly traded companies already required to repay corporate income taxes and penalties to regional officials.
The count of publicly traded firms participating during the first half of the year may soon exceed the 89 recorded for the entire year of 2025, prompting worries that Beijing's tax initiative might expand due to regional financial shortfalls, potentially endangering company profits, liquidity, and market confidence.
Most cases were handled by companies operating in pharmaceuticals, new materials, chemicals, environmental conservation, agriculture, and information technology, as reported by Wind, a Beijing-based Chinese financial market data supplier.
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"An increase in additional tax payments indicates China's initiatives to minimize systemic leaks under financial strain," stated Gary Ng, senior economist for Asia-Pacific at Natixis.
Currently, the primary focus lies with A-shares, although there may also be an impact on stocks listed in Hong Kong.
International cancer treatment company BeOne Medicines Listed three times in Mainland China, Hong Kong, and the United States, it was one of the prominent companies affected during the regulatory crackdown. According to a filing submitted to the Hong Kong Stock Exchange on June 26, its Chinese branch has agreed to pay approximately 446 million yuan (US$65.6 million) following an alert from a local taxation agency.
According to Zhang Jialin, who leads China healthcare research at Nomura, the payment might influence the company's operational earnings for this fiscal year.
The tax charge amounts to approximately 8 to 9 percent of BeOne’s projected annual operational earnings for 2026, according to Zhang. Nevertheless, he stated, "this should not be a cause for concern among investors regarding the company's underlying financial health."
Heilongjiang Agriculture, a state-owned enterprise, suffered significantly. According to an announcement submitted to the Shanghai Stock Exchange on June 23, the firm was required to refund corporate income taxes amounting to 1.02 billion yuan along with additional penalties totaling 386 million yuan for the years between 2021 and 2025.
It was anticipated that the payment would decrease the net profit allocated to Heilongjiang Agriculture's shareholders by 1.41 billion yuan during the fiscal year 2026. In Shanghai, over the last two weeks, the company's stock reached a low of 10.69 yuan per share on June 25, then rose to 11.03 yuan on July 1.
Additional firms listed were Guangzhou Jinzhong Auto Parts Manufacturing, a manufacturer of industrial components; Chengdu Olymvax Biopharmaceuticals, a company producing human vaccines; and Lopal Tech, which produces automotive specialty chemicals and lithium-ion battery cathode materials.
Such payments might affect investor confidence in the short run, as stated by Ng. "Industries that once benefited from tax advantages could encounter higher risk of reversals unless these companies are essential for maintaining supply chain safety," he mentioned.
"China's financial sector is heading toward more rigorous regulatory standards and tax collection efforts, which isn’t necessarily negative if accompanied by greater openness. However, the key issue lies in determining how much hidden revenue must be reclaimed throughout this process, potentially impacting business profits," Ng said.
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The article was first published on the South China Morning Post (www.scmp.com), a top-tier news outlet covering developments in China and Asia.
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