China's Ministry of Finance has issued revised guidance governing how finance departments determine administrative penalties, covering penalty bands, exemptions and adjustments for mitigating or aggravating circumstances. It applies to finance departments at county level and above and branches of departments at provincial level and above. The guidance takes effect Jan. 1, 2027, replacing the 2013 framework.
Where legislation specifies a fine range, discretionary benchmarks must divide it into at least three bands. As a rule, the lowest band's ceiling cannot exceed the statutory minimum plus 40% of the difference between the minimum and maximum. The highest band's floor must generally be at least the minimum plus 60% of that difference. Departures from these percentage thresholds must be explained when benchmarks are filed with the next higher finance department. Lower departments should generally apply higher departments' benchmarks directly, and any local refinements cannot exceed the prescribed penalty tiers or ranges. Benchmarks must be published and updated as needed.
Minor violations corrected promptly without harmful consequences must go unpunished, while first offenses with minor harmful consequences may be exempted if promptly corrected. Voluntary disclosure of previously unknown violations before officials obtain supervisory leads generally requires penalties below statutory minimums. Disclosure after officials obtain such leads requires lighter penalties within statutory limits. Adjustments to the application of benchmarks are permitted where their use would be manifestly inappropriate or unfair, or relevant circumstances have changed. Such adjustments require approval by the department's principal official or collective deliberation, while departures from benchmarks established by a higher department require that department's approval.