China Urges Taxpayers to Check Refund ‘Red Envelopes’ Before Deadline

Chinese tax authorities have issued a nationwide reminder urging citizens to check their tax refund “red envelopes” as the June 30 deadline for the 2025 annual individual income tax (IIT) reconciliation approaches. With over 160 million people already having completed their declarations, authorities are drawing attention to two specific issues that could prevent taxpayers from receiving their entitled refunds.

According to CCTV News, the State Taxation Administration reported that as of the end of May 2026, more than 110 million people have processed tax refunds, with the total refund amount increasing by over 17% year-on-year. The term “red envelope” (红包) is a colloquial Chinese expression for tax refunds, evoking the traditional red envelopes given during celebrations and making tax policy more accessible to the general public.

Two Key Issues to Watch

Tax authorities highlighted two situations that require immediate attention from taxpayers who have submitted refund applications but have not yet received their money.

“Tax Review Not Passed” (税务审核不通过): This occurs when the taxpayer’s declaration information contains errors or inconsistencies. The tax authorities list the specific reasons for the review failure in the official IIT App. Taxpayers are advised to check the app promptly, examine and modify their declaration data, and resubmit after confirming correctness.

“Treasury Refund Failed” (国库退库失败): This happens when the tax refund cannot be deposited into the taxpayer’s designated bank account. Taxpayers need to verify that the bank account used for the refund application is their own account and is in normal working condition. If there is a problem with the bank account, they must re-enter qualifying bank account information, and the system will resend the request to the treasury for processing.

The Scale of Participation

The annual IIT reconciliation system, which runs from March 1 to June 30 each year, has seen massive participation in 2026. Data from the State Taxation Administration shows that over 160 million people have completed their tax reconciliation declarations, with the vast majority — more than 110 million — receiving refunds. The significant year-on-year increase in refund amounts reflects the system’s progressive design, which Huang Lixin, Director of the State Taxation Administration’s Institute of Tax Science, described as reflecting the IIT’s role in “adjusting high incomes and benefiting low incomes.”

Broader Tax Revenue Context

The reminder comes amid a broader picture of rising tax revenues. According to data cited by Shui5.cn, IIT revenue reached 764.39 billion yuan in the first five months of 2026, up 12% year-on-year. Capital markets contributed nearly 50% of this growth, with restricted stock transfer tax surging 96.2% year-on-year. Meanwhile, China’s enforcement of overseas income taxation has intensified, with residents paying approximately 13 billion yuan in supplementary taxes on overseas income from January to May — reflecting the country’s deepening integration into global tax information-sharing frameworks under the Common Reporting Standard (CRS).

Enforcement and Penalties

The authorities are also signaling a tougher stance on non-compliance. As reported by Sina Finance / First Financial Daily, Shanghai tax authorities publicly exposed a case in which a company employee named Wu Huatao evaded tax by falsely reporting income of only 9,000 yuan in 2022 and fabricating “seafarer” status in 2023 to claim improper deductions. For those who need to pay supplementary taxes, the consequences of delay are severe: late payment penalties are calculated at 0.05% of unpaid tax per day, equivalent to an annualized rate of approximately 18%. Taxpayers who refuse to pay after reminders from authorities face even more severe penalties.

What Taxpayers Should Do

With the June 30 deadline now less than two weeks away, tax authorities recommend that all taxpayers who have not yet completed their reconciliation do so promptly through the official IIT App. Those who have already submitted refund applications should check the app regularly for any notifications regarding review failures or refund processing issues. Ensuring that bank account information is accurate and up to date is essential to avoid “treasury refund failed” errors.

The simultaneous increase in tax revenue from high-income sources and the growth in refunds for lower- and middle-income taxpayers demonstrates the redistributive function of China’s IIT system. As the system continues to mature with mass participation and sophisticated data-driven enforcement, taxpayers are well-advised to stay compliant and attentive to official communications from the tax authorities.