China has recently revised the Implementing Regulation of the Administrative Reconsideration Law of the People's Republic of China (the "Implementing Regulation"), which was officially promulgated on 8 May 2026 and will take effect on 1 July 2026.

The revised Implementing Regulation introduces a number of significant changes and modifications based on practical experience accumulated in recent years. Overall, the amendments are expected to further strengthen administrative reconsideration as the primary mechanism for resolving administrative disputes in China, while enhancing protection for the lawful rights and interests of individuals, legal person and businesses.

As tax lawyers who have handled a considerable number of tax administrative reconsideration cases, we naturally found ourselves reflecting on how these new provisions may affect tax dispute practice in China. Set out below are our preliminary observations on several noteworthy developments and their potential implications.

One important distinction between administrative reconsideration and administrative litigation in China is that reconsideration authorities may review not only the legality of an administrative action, but also its "appropriateness" or "reasonableness".

While the Administrative Reconsideration Law and the previous Implementing Regulation already reflected this concept in practice, the revised Implementing Regulation now expressly provides that reconsideration authorities shall conduct a comprehensive review of both the legality and appropriateness of administrative acts.

This development is particularly relevant in tax disputes. Tax legislation and regulations may not always keep pace with increasingly sophisticated and rapidly evolving business arrangements, and tax authorities often exercise substantial administrative discretion in enforcement. As a result, many tax disputes involve not only legal interpretation, but also questions of proportionality, fairness, and administrative reasonableness. The revised Implementing Regulation's reinforcement of the requirements for appropriateness review is expected to promote, to some extent, an improvement in the appropriateness of tax administrative acts.

The revised Implementing Regulation further requires respondents (i.e., the administrative authorities) to explain, in their written responses, both the legality and appropriateness of the challenged administrative acts. In practice, this may encourage tax authorities to provide more substantive and transparent justifications, rather than vaguely stating that the administrative act is reasonable and lawful.

China's administrative reconsideration system has gradually evolved from a framework where mediation was once prohibited to one where mediation is actively encouraged.

The revised Implementing Regulation clearly reinforces this policy direction. It expressly identifies the organization of mediation as one of the statutory duties of reconsideration authorities and requires the relevant administrative authorities to support the reconsideration bodies in carrying out mediation work.

Importantly, the Regulation also provides that parties' statements or concessions made during mediation negotiations may not subsequently be used against them in the reconsideration proceedings. This protection is designed to reduce parties' concerns about participating in mediation settlement discussions.

In the tax context, this change could be particularly meaningful. Tax disputes often involve long-term relationships between taxpayers and tax authorities, and negotiated resolutions may in many cases provide more practical and sustainable outcomes than purely adversarial proceedings.

We expect mediation to play an increasingly important role in future tax administrative reconsideration cases, contributing to the substantive resolution of disputes and the maintenance of constructive tax authority-taxpayer relationship.

China has already taken steps in recent years to facilitate administrative reconsideration procedures through online filing, electronic commnuications, etc.

The revised Implementing Regulation goes further by requiring the establishment of a unified national digital platform for administrative reconsideration. It also expressly confirms that reconsideration activities conducted online shall have the same legal effect as offline proceedings.

This suggests that administrative reconsideration procedures may gradually become more comparable to China's increasingly sophisticated online litigation systems, improving both accessibility and procedural efficiency.

Under the Administrative Reconsideration Law, applicants and third parties may appoint lawyers or other representatives to participate in reconsideration proceedings. However, the previous rules did not clearly address whether respondent administrative authorities could also engage external counsels.

In practice, this ambiguity sometimes resulted in situations where taxpayers' lawyers communicated only with front-line enforcement officials, potentially creating difficulties in cases involving complex civil, commercial, or transactional issues underlying the tax dispute.

The revised Implementing Regulation now expressly provides that respondent authorities may appoint a lawyer as representative, provided that one or two staff members of the administrative authority also participate in the proceedings.

This is a practical and welcome clarification. In complex tax disputes, the combined participation of government officials and external legal counsel may facilitate more effective communication and help promote substantive dispute resolution.

The revised Implementing Regulation provides more detailed rules for calculating the filing period for administrative reconsideration applications, covering various service methods including direct service, postal service, electronic service, and public notice service.

For tax disputes, this clarification aligns well with the service rules under the Implementing Rules for Tax Collection and Administration Law and may help reduce procedural disputes regarding filing deadlines.

In practice, Chinese tax administration relies heavily on normative documents and regulatory guidance, which can sometimes become a source of disagreement between taxpayers and tax authorities.

Under the Administrative Reconsideration Law, applicants seeking incidental review of a normative document generally need to raise such request when filing the reconsideration application. However, in practice, tax authorities may rely on internal or superior provisions without expressly citing the specific normative documents in the original enforcement decision, only referencing them later during the reconsideration proceedings.

The revised Implementing Regulation addresses this issue by allowing applicants to request incidental review of a normative document at any time before the reconsideration authority renders its decision, if the applicant was previously unaware that the challenged administrative action was based on that document.

This amendment significantly improves procedural fairness and strengthens applicants' rights to effective administrative remedies.

The revised Implementing Regulation also further refines the categories and applicable circumstances for reconsideration decisions, including decisions to modify, revoke, confirm illegality, confirm invalidity, or dismiss reconsideration claims.

This more detailed framework should help reconsideration authorities apply remedies with greater precision and provide parties with clearer expectations regarding the available outcomes.