Huaihe Energy (600575) pays an additional 174 million in taxes and fees, with taxes and late fees accounted for over two years' profits and losses, drawing attention!

(Source: Talk about Finance and Tax)

On March 28, Huahe Energy (600575) released an announcement related to the payment of back taxes. The company and its subsidiaries within the scope of consolidated financial statements, due to tax-related self-examinations, are required to pay back an environmental protection tax and the corresponding late fees totaling approximately RMB 174 million. This matter does not involve administrative penalties related to tax affairs and will not affect the company’s normal production and operations. The company’s accounting treatment for the relevant matters shows a clear difference from common industry practices, drawing market attention.

The announcement shows that the company and its subsidiaries are required to pay back an environmental protection tax of RMB 125 million this time, generating late fees of approximately RMB 49 million.

As of the date of the announcement disclosure, the company has completed part of the back payments. Cumulatively, it has paid RMB 97 million in environmental protection tax and RMB 39 million in late fees, for a total of RMB 136 million. The remaining unpaid portion is currently under communication and confirmation with the tax authorities, and the back payments will be completed according to the communication results.

It is worth noting that the accounting treatment for this back-payment matter breaks with industry norms, and the company did not include the tax and the late fees uniformly in the same accounting year’s profit or loss.

According to the relevant provisions of “Accounting Standards for Business Enterprises No. 28,” the company determines that this back-payment matter does not fall under prior-period accounting errors, and no retrospective adjustment to prior-period financial data is required.

Among them, the environmental protection tax of RMB 125 million to be paid back will be recorded in the profit or loss for 2025. Based on calculations, this tax payment is expected to reduce the net profit attributable to shareholders of listed companies for fiscal year 2025 by RMB 77 million. Meanwhile, the late fees of approximately RMB 49 million will be recorded in the profit or loss for 2026, and are expected to reduce the consolidated net profit attributable to the parent company for fiscal year 2026 by RMB 35 million.

Under usual circumstances, when listed companies pay back taxes and the corresponding late fees, both are typically included in the profit or loss for the same period in which the back-payment act occurs. Huahe Energy, depending on the nature of the matter, accounts for the two items across two separate accounting years. This is a professional judgment made strictly in accordance with accounting standards, and it also enables the market to clearly see the specific impact of this matter on the company’s performance over the past two years.

In the announcement, Huahe Energy explicitly states that this back-payment of tax and fees will not interfere with the company’s normal production and operations. At the same time, it reminds the majority of investors to pay attention to investment risks and make rational judgments about market information.

As a listed company in the energy industry, by proactively completing its tax-related self-examination and paying back taxes and fees in accordance with the rules, this reflects the concept of compliant operations. Going forward, its communication progress with the tax authorities and its performance will still be worth the market’s ongoing attention.

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