SPP targets refined oil tax evasion

Chinese procuratorates handled 1,881 public interest litigation cases involving tax violations in the refined oil sector from September 2025 to mid-June this year, helping recover nearly 4.85 billion yuan ($716 million) in unpaid taxes and late payment surcharges, the Supreme People's Procuratorate said recently.

The cases were part of a special regulatory campaign jointly launched by the SPP and the State Taxation Administration in September to strengthen tax oversight on refined oil retailers.

Refined oil is a basic and strategic resource closely linked to economic development and people's daily lives. Tax evasion in the sector not only causes losses to State revenue but also disrupts market order and undermines fair competition, the SPP said.

Investigations found that some filling stations had adopted increasingly sophisticated methods to alter transaction data and conceal sales revenue. Such practices have evolved from simple hardware modifications to coordinated manipulation involving embedded devices, supporting software and cloud-based systems.

Operators may replace encoders or tax-control chips, or use separate operating systems and back-end platforms, to falsify original transaction data and underreport taxable income, according to the SPP.

Some retailers also concealed revenue through off-the-books transactions, including sales made without invoices and payments collected through personal or third-party QR codes.

To address the failure to issue accurate invoices, the State Taxation Administration recently announced the nationwide introduction of an "invoice upon transaction" system for refined oil retailers. In line with the policy, filling stations must implement the system by Nov 1, 2026. After each fuel purchase, retailers will be required to immediately issue buyers with fully digital electronic invoices based on complete transaction data, making it more difficult to conceal sales.

In addition to tax evasion, prosecuting authorities have targeted unauthorized fuel storage and sales operations, which pose risks to both tax administration and public safety.

Such operations typically involve privately installed storage tanks, mobile refueling vehicles and illegal filling stations. Operators sometimes convert vans and box trucks into mobile refueling stations or bury fuel tanks at unauthorized sites to sell gasoline and diesel to passing vehicles.

These activities allow illegally sourced fuel to enter the market, resulting in losses to State revenue. Hidden locations, unqualified equipment and poorly managed storage facilities also pose serious public safety risks, the SPP said.

The SPP highlighted several typical cases from across the country.

In Shanxi province, prosecutors used big data legal supervision models to identify more than 1,600 tip-offs related to filling stations suspected of underpaying taxes. By issuing procuratorial recommendations and taking other supervisory measures, they helped recover more than 288 million yuan in taxes and late payment surcharges.

In Tianjin, prosecutors found that several fuel companies had collected payments through personal and third-party payment codes without issuing invoices and had submitted false tax declarations. Procuratorial recommendations led to the recovery of nearly 18.1 million yuan in taxes and late-payment surcharges.

In Zhejiang province, prosecutors directly filed an administrative public interest litigation case to urge authorities to fulfill their regulatory responsibilities. The action prompted local government departments to investigate and close 31 illegal refueling sites, inspect 155 unauthorized fuel tanks and seize 374 mobile refueling vehicles. Authorities also screened 553 entities for tax risks, filed 98 cases and recovered 140 million yuan in taxes.

The top procuratorate said prosecutors will continue targeting prominent tax violations in the refined oil sector while strengthening coordination with taxation, commerce, public security, market regulation and transportation authorities to close regulatory loopholes, improve market order and safeguard national tax revenue.

The SPP also advised consumers to request invoices after purchasing fuel to protect their rights and help foster a fair, law-abiding business environment.

yangzekun@chinadaily.com.cn