China’s National Audit Office (CNAO) has uncovered tax evasion and oversight failures at several major state-owned financial institutions.
In its annual work report, the CNAO said the Bank of China had avoided paying 2.37bn yuan ($348.36m) in taxes by structuring private equity funds in a way that allowed it to benefit from tax breaks intended for public funds.
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The audit body found that from April 2023 to August 2025, the Bank of China routed investments via two affiliated financial companies and enrolled large numbers of its own staff as nominal investors, each contributing between 1 yuan and 100 yuan.
This arrangement was used to present 11 privately offered funds as publicly offered vehicles, according to a South China Morning Post report.
In China, publicly offered mutual funds generally qualify for corporate income tax exemptions.
The report concluded that the Bank of China had improperly taken advantage of those preferential rules, the publication added.
The findings come as local authorities struggle with significant revenue gaps following a prolonged slump in the property sector, leading Beijing to tighten tax collection efforts aimed at both companies and high earners.
The CNAO also pointed to lapses at the Agricultural Bank of China.
The lender, which focuses on rural finance, was found to have issued 11.07bn yuan in loans to non-compliant farmland projects between December 2021 and August 2025.
Part of this financing was later redirected into wealth management products and the repayment of existing debts, the report said.
China Everbright Group was further cited for loose supervision of its subsidiaries and the unauthorised use of its brand, according to the audit findings.
This comes after it was reported that China is planning to increase penalties on auditors who approved falsified financial statements.
