Fraudulent invoice cases often involve numerous parties and complex fund flows. Investigative authorities frequently engage third-party institutions to prepare audit reports to determine whether funds were recycled or invoice fees were paid, thereby transferring relevant parties for prosecution on charges of fraudulent invoicing. In practice, many prosecuting authorities tend to accept the conclusions of third-party institutions, sometimes even over-relying on audit reports to the extent of “substituting examination with certification”—a practice that severely violates fundamental principles of criminal procedure. This article analyzes and discusses audit reports through the lens of a specific false invoicing case.

Editor's Note: In June 2025, the "Rules on the Reporting of Tax-Related Information by Internet Platform Enterprises" and supporting tax policies were officially implemented, marking a new phase in China's e-commerce tax collection and management. By establishing platform information reporting obligations, the new regulations effectively address the long-standing challenge of "information asymmetry" in collection and management, placing higher demands on compliance management for various e-commerce operators. This article analyzes the core points of the new regulations, the identification of tax-related risks, and provides compliance recommendations, offering reference for market entities to adapt to the new regulatory environment.

Editor's Note: Value-added tax is a "chain tax". If the drawer or the drawee is suspected of falsely making out, the risk of falsely making out may be transmitted through the invoice chain, which may lead to administrative and even criminal risks of the other party. In general cases of illegal invoices, enterprises may face procedures such as self-examination, tax investigation, tax inspection, and criminal transfer. It is of great significance to clarify the possible trends and favorable space for each stage to prevent and control criminal risks and prevent further losses. In addition, in practice, there are cases where public security organs file cases first based on case clues. In this case, it is particularly important to understand and respond to the convergence of execution. This paper, from the perspective of the drawee, analyzes the key points that enterprises should pay attention to at all stages in the case of suspected fraudulent opening.

Article 10(1)(iii) of the Supreme People's Court and Supreme People's Procuratorate's Judicial Interpretation on Tax-Related Cases explicitly includes “issuing VAT special invoices through fictitious transaction entities for business operations ineligible for tax deduction” within the scope of false issuance. This provision aims to target the use of surplus invoices for fraudulent issuance, with the associated criminal risks significantly increasing following the issuance of the judicial interpretation. In practice, differing judicial interpretations of surplus invoice fraud lead to substantial variations in the criminal liabilities ultimately borne by relevant parties. This article analyzes surplus invoice fraud through the lens of a real-world case.

Editor's Note: Recently, tax authorities have continuously exposed multiple tax-related cases involving nominee shareholding, where several anonymous shareholders were pursued for Individual Income Tax after being "penetrated." As tax laws have not yet clearly stipulated the tax treatment for registered shareholders and anonymous shareholders, in practice, there are still many controversies regarding their tax obligations in various scenarios such as dividend distribution and the restoration of nominee-held shares. This has led to varying degrees of administrative and even criminal tax risks. This article aims to provide a brief overview and analysis of this issue.

Editor's Note: With the deepening of the "streamline administration, delegate power, strengthen regulation and improve services" reform, the procedures for deregistration of enterprises have been continuously optimized, making it more efficient and convenient to withdraw from the market. However, in practice, some enterprises evade their tax obligations by means of false reporting and cancellation of registration. Recently, State Taxation Administration of The People's Republic of China disclosed two cases of "escape cancellation" for the first time. In addition, the liquidation income generated in the cancellation process is also easy to be ignored, and cases of non-transaction transfer without tax payment are not uncommon. This paper analyzes the tax obligations that enterprises should pay attention to when they cancel, and further discusses the recovery of tax owed by cancelled enterprises for readers' reference.
I. Practical case: recovery of tax arrears from shareholders of cancelled enterprises and restoration of tax registration.
With the revision of the Company Law and the improvement of relevant supporting laws and regulations, for cancelled enterprises that fail to fulfill their tax declaration obligations according to law and owe taxes, in practice, the tax authorities either recover taxes and late fees from shareholders on the basis of the commitment to clear taxes, or jointly cancel the cancellation registration and restore the tax registration with the municipal supervision department, and recover taxes and late fees from the company. If the relevant personnel such as enterprises and shareholders are suspected of criminal offences before cancellation, they will continue to be investigated for criminal responsibility.
(i) according to the cancellation of the commitment issued by the shareholders to clear taxes, to recover taxes and late fees from shareholders.
On March 8, 2025, the Inspection Bureau carried out tax inspection on the enterprises involved in the case of accepting false invoices, and determined that the company used false invoices for value-added tax, resulting in less tax payment, which was characterized as tax evasion. Because the company cancelled its industrial and commercial registration on March 17, 2025, the inspection bureau determined that three shareholders of the company defrauded the cancellation of registration with a false liquidation report based on the promise of "there is no unpaid tax payable" signed during liquidation, and asked the three shareholders to bear the unpaid tax and late payment fees in proportion to their capital contribution.
(ii) the tax authorities jointly with the municipal supervision department to cancel the cancellation of industrial and commercial registration and resume tax registration to recover taxes.
In September this year, State Taxation Administration of The People's Republic of China announced two "escape" cancellation tax evasion cases. After the two companies involved in the case were cancelled after concealing their income and evading taxes, the tax department, in conjunction with the market supervision and management department and the administrative examination and approval service department, revoked the cancellation of the industrial and commercial registration of the two companies and resumed the tax registration according to law, and made a decision on punishment according to relevant facts and regulations.
(iii) defrauding simple cancellation after falsely issuing invoices, and the procuratorial organ proposes to cancel the registration across provinces.
Wang and his clothing company were put on file for investigation on suspicion of falsely issuing special VAT invoices. In order to avoid fines and other responsibilities, Wang defrauded the company of simple cancellation of registration with false materials during the bail pending trial. The procuratorial organ went to the market supervision department of other provinces to suggest canceling its simple cancellation registration and restoring the company's qualification as a business entity. After prosecution by the procuratorate, the court sentenced the defendant Wang to three years' imprisonment, suspended for four years and fined 100,000 yuan for falsely issuing special invoices for value-added tax.
II. tax clearance is the premise of cancellation, non-transaction transfer and other special circumstances need to pay attention to tax obligations.
Under normal circumstances, an enterprise's termination of operation and withdrawal from the market must go through three main processes: resolution dissolution, liquidation distribution and cancellation of registration. In liquidation, for example, Article 16 of the Detailed Rules for the Implementation of the Law on Tax Collection and Management stipulates that "taxpayers should settle the tax payable, late fees and fines, and hand in the invoices, tax registration certificates and other tax certificates to the tax authorities before going through the cancellation of tax registration", and the enterprises to be cancelled need to pay the taxes owed, late fees and other tax certificates generated in the liquidation process.
If the enterprise has not incurred or paid off the creditor's rights and debts, employees' wages, social security fees, taxes payable, etc., and has made a written commitment (that is, submitted the Letter of Commitment for All Investors) to bear the relevant legal responsibilities and publicized it according to the regulations, it can be cancelled according to the summary procedure and exempted from handling the tax clearance certificate. After the tax department obtains the information pushed by the market supervision department to apply for simple cancellation of registration through information sharing, the tax department does not raise any objection to the taxpayers who are shown by the inquiry system as follows: first, taxpayers who have not handled tax-related matters; second, taxpayers who have handled tax-related matters but have not received invoices (including invoicing on behalf of them), owed taxes and have no other unfinished matters; and third, taxpayers who have completed tax clearance procedures such as paying off invoices and settling tax payable at the time of inquiry.
It is not difficult to see that fulfilling tax obligations and paying taxes and fees on liquidation income are necessary procedures for the cancellation of enterprises. In practice, except for the "escape" malicious cancellation of unpaid taxes to avoid tax obligations, the tax obligations in the liquidation process are often easily ignored. According to the provisions of Article 55 of the Enterprise Income Tax Law, an enterprise shall declare and pay income tax to the tax authorities in accordance with the law on the liquidation income before going through the cancellation of registration. At the partnership level, Article 16 of the Provisions on Individual Income Tax Collection for Investors in Sole proprietorship Enterprises and Partnership Enterprises (Caishui [2000] No.91) stipulates that when a partnership enterprise is liquidated, investors shall settle tax-related matters with the competent tax authorities before canceling registration, and the liquidation income of the partnership enterprise shall be regarded as the annual production and operation income. In the demolition of shareholding structure, it is very common that the company loses its legal person qualification and the shares are restored to investors through non-transaction transfer. According to the regulations, the above transactions belong to the change of stock ownership between different entities and are regarded as sales in tax law. Limited liability companies should be liquidated before cancellation. In practice, there have also been many cases in which the cancelled enterprises have been restored to tax registration to recover taxes or recovered from shareholders without reporting taxes.
III. to recover the tax arrears from the cancelled enterprises or shareholders should be in accordance with the law.
In recent years, the relevant laws and regulations have improved and clarified the legal liability for false promises and evasion of debts or penalties through cancellation. For example, Article 240th of the Company Law revised in 2023 added a simple cancellation system and clarified the legal liability of shareholders for false promises in the third paragraph. "If a company cancels its registration through summary procedures and shareholders make false promises to the contents specified in the first paragraph of this article, they shall be jointly and severally liable for the debts before cancellation of registration." Article 20 of the Implementation Measures for the Administration of Company Registration, which was implemented in February this year, clarified the situation of cancellation of registration by the registration authority. "If there is evidence that the applicant obviously abused the independent status of the company as a legal person and the limited liability of shareholders, maliciously transferred property, evaded debts or evaded administrative punishment by changing the legal representative, shareholders, registered capital or canceling the company, which may endanger the public interests, the company registration authority shall not handle the relevant registration or filing according to law, and the one that has already been handled shall be revoked."
In practice, with the promotion of multi-department information linkage and collaborative tax administration, the tax cancellation pre-inspection service is embedded in the enterprise cancellation process; For the problem of tax arrears of cancelled enterprises, some local tax authorities require shareholders to bear corporate debts in proportion to their capital contribution based on false promises when shareholders cancel; Some tax authorities signed a memorandum of cooperation with the municipal supervision department, which clarified the path of tax arrears recovery, that is, for the tax-related illegal enterprises that have been cancelled, the tax authorities initiated and informed the market supervision department of the relevant investigation, and the market supervision department cancelled the registration of the enterprises involved in the case according to law, restored their qualifications as commercial subjects, and then the tax authorities recovered the taxes.
There are many disputes in practice about whether the tax authorities can recover taxes from the shareholders of cancelled enterprises. Article 56 of the Law on Tax Collection and Management (Revised Draft for Comment) issued this year adds the applicable path of denying corporate personality in the tax field, that is, the tax authorities can directly recover taxes and tax late fees from shareholders who abuse the independent status of legal persons and the limited liability of shareholders and evade taxes by withdrawing funds or canceling. We believe that if the shareholders abuse the independent status of legal person and cancel in bad faith, and the tax authorities intend to "pierce the corporate veil" to recover taxes from the shareholders, they should still take the judicial review mechanism of the people's court established by the Company Law as the precondition—that is, if the tax authorities claim that the investors have abused their rights, they should file a lawsuit to the court to deny the legal person personality according to law. According to the facts and evidence, the judicial organ will make a substantive review and judgment on whether the investor abuses the independent status of the legal person and the limited liability of the investor, instead of directly denying the personality of the legal person through administrative procedures, so as to prevent the executive power from making a final judgment on civil legal relations beyond the judicial power.
As for the cancellation of registration by the municipal supervision department first, it is necessary to have relevant evidence to prove that the enterprise abuses the independent status of the company as a legal person and the shareholders have limited liability to evade debts and avoid administrative punishment by canceling the company, submit false materials or take other fraudulent means to conceal important facts to defraud the cancellation of registration. If the cancelled enterprise does not exist in the above circumstances, the municipal supervision department may not be able to cancel the registration of the enterprise only by the letter from the tax authorities.
IV. Summary
When an enterprise intends to withdraw from the market and cancel the registration, it is necessary to comprehensively sort out whether there is historical tax arrears, and pay attention to the tax liability of liquidation income, especially for special circumstances such as non-transaction transfer, and the nature of tax law should be clarified to avoid the unpaid tax affecting the cancellation procedure, resulting in late fees and even joint liability of shareholders.

Editor's note: Most of the tax violations in the financial industry are manifested in two types: false invoicing and tax evasion. Through observing these cases, it was found that financial enterprises involved large amounts of false invoicing or tax evasion, involving various financial sub-industries such as trusts, funds, and financing leasing. Based on this, this paper intends to analyze the causes of tax violations in financial enterprises, and propose corresponding strategies for resolving tax administrative and criminal responsibilities.

Editor's Note: A Non-Vessel Operating Common Carrier (NVOCC) is a carrier that, without owning its own transport vessels, accepts cargo from shippers, signs contracts of carriage with shipping companies in its own name, and then issues bills of lading or other transport documents to the shippers. NVOCCs originated in international shipping and later expanded to domestic water transport. After February 27, 2019, the administrative approval for NVOCC business was replaced with a filing system, further enhancing market competitiveness. However, compared to the development of digital freight platforms, NVOCC progress has been relatively slow, with an incomplete regulatory system. Particularly, the lack of clear guidance at the tax level has led to questions about some NVOCC practices and repeated involvement in risks related to falsely issued invoices. This article provides a brief analysis.