Foreign Trade Industry Tax-related Criminal Risk Report (2021)

Export tax rebate refers to a tax system whereby the State refunds to export enterprises the import tax on raw materials for exported goods, as well as indirect taxes such as value-added tax (VAT) and consumption tax (CST) that have already been paid at various stages of production and circulation in the country, so that exported goods can enter the international market and participate in international competition at a price that does not include indirect taxes. During the 13th Five-Year Plan period, according to the data released by the General Administration of Customs and the State Administration of Taxation, China's export trade volume totaled about 807,527,700,000,000 RMB, and the country handled a cumulative total of 7,073,600,000,000 RMB of export tax refunds, of which 1,454,900,000,000 RMB of export tax refunds were granted in the whole year of 2020, and the time of handling the export tax refunds has been speeding up and efficiency accelerated. Coupled with the successive implementation of paperless customs clearance by relevant departments, reform of the foreign exchange underwriting system, and facilitation of RMB settlement services for cross-border trade, the export tax rebate system has played an important supportive role for the development of the foreign trade industry and the generation of foreign exchange by export enterprises. In order to standardize the tax order, safeguard the dignity of the tax law, and curb the momentum of tax fraud and false invoicing crimes in the foreign trade industry, the state has always been in a high-pressure situation to crack down on fraudulent export tax rebates.In August 2018, the State Administration of Taxation (SAT), the Ministry of Public Security (MPS), the General Administration of Customs (GAC) and the People's Bank of China (PBOC) held a joint meeting in Beijing to deploy a two-year special action to crack down on the crimes of falsely issuing value-added tax (VAT) invoices and fraudulently obtaining export tax refunds. Two-year special action. As of January 2021, a total of 322,300 enterprises suspected of false invoicing and tax fraud have been investigated and dealt with, with a tax amount of about 85.015 billion yuan. Fraudulent export tax refund is a criminal offense with the heaviest criminal liability in the tax-related field, involving the most complicated transaction subjects and transaction links. In order to protect the security of national tax money, tax authorities in the tax collection and management, in line with the "who exports, who collects foreign exchange, who refunds, who is responsible for" principle, declared export tax rebates of foreign trade enterprises for the direct responsibility of the main body, whether the upstream enterprises flee, suspected of false openings, or upstream and downstream enterprises conspire with the foreign trade enterprises as a channel to fraudulent export tax refunds, the foreign trade enterprises are facing a more serious problem. Foreign trade enterprises are facing more serious criminal liability risks. The Report on Tax-Related Criminal Risks in Foreign Trade Industry (2021) is compiled by Huatax based on its in-depth observation of the foreign trade industry and the profound summary of its experience in representing foreign trade enterprises in tax-related criminal cases in recent years, with the aim of revealing the characteristics of the causes of the tax-related criminal risks in the foreign trade industry and the new direction of investigating and dealing with the cases of tax cheating in 2021, and on the basis of which, it puts forward the targeted defense strategies and compliance suggestions, with a view to providing a good opportunity for the foreign trade enterprises to avoid criminal risks and realize lawful and compliant operation. The report is divided into six parts. This report is divided into six parts, and the full text is about 15,000 words.

Nov. 20, 2023, 1:32 p.m.

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Pharmaceutical Enterprises Tax-related Criminal Risk Report (2021)

In this report, we firstly analyze the big data of more than 715 tax-related criminal cases of pharmaceutical enterprises retrieved through the referee network, Qixinbao, Enterprise Search and other platforms. On this basis, we analyze and summarize the legal application and defense strategies of major tax-related criminal offenses involved in tax evasion, false invoicing, and false VAT invoicing, as well as put forward management and control suggestions for the enterprises' compliant operation. Since the main sales market of drugs is hospitals, the co-existence of false invoicing and commercial bribery has led to the interconnection of false invoicing and bribery cases. In the cases we have searched, some of the judgments show that the cash kickbacks given by pharmaceutical representatives to doctors accounted for 10%-30%, and the motivation for false invoicing is not only to "more deductions of inputs" and "increase profits", but also to "increase profits", which is the main reason for false invoicing. In addition to "more deduction of inputs" and "increase in profits", the motivation for false driving is more based on the cash demand for commercial bribery. Since 2016, nine ministries to correct the medical purchase and marketing field and medical services in the unhealthy wind, will "crack down on false invoicing, tax evasion and other illegal behavior" as the focus of governance, since then in the corrective work, the fight against invoices related to illegal behavior has become the focus of the work in successive years. 2020 nine ministries to correct the unhealthy wind in the field of medical purchases and marketing In 2020, the nine ministries and commissions will take "cracking down on the illegal acts of pharmaceutical enterprises colluding with contract marketing organizations (CS0) to cash in fictitious fees to pay for illegal marketing expenses" as a key point of their work. Through the analysis of more than 700 cases, we found that more than 70% of tax-related criminal cases involve tax documents, and the "Letter of Concurrence on Tax Violation Cases", "Notification of Confirmed False Openings", "Audit Report", "Decision on Administrative Treatment of Taxes", and "Situation Statement on False Openings of Enterprises", etc. issued by the tax authorities have become the important evidences proving that the enterprises have constituted the criminal offenses related to taxes. As tax-related criminal cases are mostly transferred to public security organs after audit by tax authorities, the cross-cutting features of execution and punishment are more significant. According to the provisions of the Criminal Procedure Law, the evidence collected by administrative organs in administrative procedures conforms to the procedural norms and has the requirements of objectivity, authenticity and legality, and can be transformed to be applied as evidence in criminal proceedings. Whether it is the calculation of the proportion of tax evasion amount occupying the taxable amount for the tax evasion crime, or the determination of the key facts such as the amount of invoices issued for the crime of false invoicing and the amount of tax loss caused, the judicial authorities rely on the investigations of the tax authorities in the inspection procedures, or send a letter to the tax authorities for clarification. Therefore, enterprises should pay full attention to the tax audit procedure, especially the counterparty has been characterized as false invoicing invoice concurrence case, more should pay full attention to the impact of the tax audit, review procedures on criminal risk, the risk response port forward, as early as possible to hire tax lawyers to intervene. In addition, through the big data analysis of tax-related criminal cases of pharmaceutical enterprises, we also pay attention to the fact that although there is a positive correlation between the amount of false invoicing/tax evasion and the final sentence, there is a big difference in the final judgment of the same sentencing circumstances and the same amount of tax involved in judicial practice in different places. The complexity of tax-related criminal cases superimposed on the special background of the pharmaceutical industry highlights the importance of the tax risk management and control in the pharmaceutical industry, especially due to the fact that the tax audit and review procedures have already been characterized as the criminal risk. The importance of management and control, especially due to the merger of national and local taxes, the enhancement of the ability of big data tax administration, and the departmental collaboration mechanism of multiple investigations in one case, the external risk of tax-related criminal risks of enterprises has been increased, and the invoice management compliance is still the keyword for pharmaceutical enterprises to avoid the responsibility of criminal risks in the year of 2021.

Nov. 20, 2023, 1:34 p.m.

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