Beijing will launch a new set of rules next month targeting tax evasion by private business owners and multinationals. The new rules, effective October 15, will require all business owners to register with the tax bureau before they open a bank account, apply for tax exemption or reduction, or formally close their businesses, Xinhua reported. They will also have to report the value and fees of transactions made with connected companies. The stricter rules come after Premier Zhu Rongji lashed out at the tax evading big earners, and the mainland tax authorities noted signs of possible profit manipulation between foreign-invested enterprises (FIE), many of which report persistent losses but continue to expand their operations. Authorities are said to have suspected FIEs might be engineering losses through a practice known as transfer pricing, by 'buying high from and selling low to' related parties to avoid tax. Staff at some representative offices of foreign companies were also found to have delayed payment of personal income tax. Mr Zhu launched the public debate in July when he attacked the 10 richest people in China for paying no taxes, saying that without tax revenue, the government could do nothing. The rich and famous in Beijing are reported to have been put on a watch list and closely monitored as the capital steps up its campaign to prevent tax dodging. Under the new rules, the tax authorities can 'adjust' taxes should they find companies have not carried out connected transactions at prices or fees as they would have done with mutually independent third parties. Such transactions include purchasing, financing, asset transfers and provision of labour services. This could mean tax authorities would attribute extra income to the FIEs, said a Hong Kong-based accountant. The new rules also reflect the need to strengthen taxation of individuals, which has become an increasingly important source of government revenue as the private sector booms, producing an emergent class of wealthy individuals. The personal income tax issue was brought into the spotlight after leading Chinese actress Liu Xiaoqing was arrested in Beijing for tax evasion in July. A number of private entrepreneurs were reported to have rushed to pay their due taxes, which had previously been evaded, in a bid to avoid punishment. Tax authorities at both national and regional levels will issue the same code to a registered tax payer in order to share the same data base. Tax payers will have to register with a tax bureau within 30 days of obtaining a business licence. To strengthen collection, authorities will also introduce so-called tax monitoring devices that register transactions. Such devices will be installed on cash machines, in petrol stations, taxis and in other small businesses. An 'authoritative spokesman' of the State Administration of Taxation in Beijing has previously sought to allay public fears by saying that the crackdown was not an attack on the booming private sector.