Since the SASAC issued the Notice on Printing and Distributing the "Guidelines for Compliance Management of Central Enterprises (for Trial Implementation)" on November 2, 2018, the construction of enterprise compliance systems has been widely carried out among central enterprises. Subsequently, the Supreme Court led the implementation of compliance reform pilot projects for enterprises involved in the case, as well as the implementation of third-party supervision and evaluation mechanisms at the national level, allowing the construction of enterprise compliance systems to be promoted among private enterprises. "Tax compliance" has been emphasized in the construction of the compliance system due to the fact that many of the "compliance non prosecution" guidance cases announced by the Supreme Court of Inspection involve enterprises falsely issuing special VAT invoices. At the same time, the release of multiple online celebrity anchors and celebrity tax evasion cases has also attracted taxpayers' attention after lunch, allowing them to start thinking, discussing, and paying attention to their own tax compliance.

So, what exactly is tax compliance? What is the boundary, that is, how to establish a tax compliance system for enterprises to protect them from tax risks? In this article, the author discusses the connotation and boundaries of tax compliance with readers.

1、 Tax compliance means that corporate tax treatment is legal

Although "tax compliance" is often mentioned by participants in the construction of corporate compliance systems, this concept has not appeared in legal or policy documents. The "Notice on Printing and Distributing the" Guidelines for the Compliance Management of Central Enterprises (for Trial Implementation) "and the" Notice of the General Office of the Ministry of Justice on Strengthening the Participation of Corporate Lawyers in the Compliance Management of Enterprises "contain statements about" financial taxation ", while the former explains financial taxation, That is, "improve and improve the financial internal control system, strictly implement the operation and approval process of financial matters, strictly abide by financial discipline, strengthen the awareness of paying taxes according to law, and strictly comply with tax laws and policies." Referring to this qualitative analysis, we can say that one of the links in the construction of the compliance system is "financial tax collection", which includes two parts: financial and tax compliance. Financial compliance requires an enterprise to have a complete financial management system, and financial management should comply with the provisions of accounting standards; Tax compliance requires that tax related matters in the operation of enterprises comply with the provisions of tax laws and regulations. Enterprises generally have a finance department, which employs accounting personnel to be responsible for internal accounting management, reimbursement, tax declaration, and other matters. However, few enterprises have set up tax departments to help them grasp and understand tax policies, and conduct legal reviews of their daily tax issues, such as whether the timing of income tax recognition is accurate, whether the invoices obtained by enterprises comply with the provisions of the "Invoice Management Measures" and the "Provisional Regulations on Value Added Tax", and whether the tax treatment of transactions between enterprises and affiliated enterprises is legal.

The habit of "valuing finance over taxation" in China's enterprise management has led to non-compliance in tax treatment or tax violations by enterprises without their knowledge. In the context of the current widespread application of big data in the tax inspection and case selection process, taxpayers' tax violations are more easily identified by the tax authorities. Once an enterprise is subject to tax inspections, the cost and process of resolving risks will inevitably affect its operations. Therefore, enterprises' "financial and tax compliance construction" should pay more attention to tax (i.e., tax) compliance construction, strengthen understanding of tax laws, prevent tax related risks, and set up barriers for tax risks at the front end.

2、 Tax compliance should establish a framework within the scope of the tax collection and management law

After understanding what tax compliance is, another issue arises: what is the boundary of tax compliance, and what standards should be met in the construction of an enterprise's compliance system to complete tax compliance construction. No document provides an answer to this question. However, we can see similar statements in the case of "Non prosecution for compliance" (Case No.: Ping Jian Er Bu Xing Bu sui [2022] Z1) released by the Supreme Court of Justice: "Our court believes that Jinan * * Construction Decoration Engineering Co., Ltd. * * Company and Geng Moumou have implemented the Criminal Law of the People's Republic of China." The act specified in Article 205-1 constitutes the crime of falsely issuing invoices, but the circumstances of the crime are minor. Jinan * * Construction Decoration Engineering Co., Ltd. * * Company has already paid taxes and completed corporate compliance management. Geng Mou voluntarily surrendered to the police and pleaded guilty to punishment. According to Article 37 of the Criminal Law of the People's Republic of China, criminal punishment can be exempted. "In accordance with the provisions of Article 177 (2) of the Criminal Procedure Law of the People's Republic of China, it is decided not to prosecute Jinan * * Construction Decoration Engineering Co., Ltd. * * Company and Geng Mou."

Through this case, it can be seen that if an enterprise commits a tax related crime, but the circumstances are minor, it can be exempted from prosecution after completing compliance management. However, the boundaries of corporate compliance management are not documented. According to the article "The Procuratorial Organs Deeply Promote the Compliance Reform Pilot of Enterprises Involved in Cases and Propose Countermeasures and Suggestions for Outstanding Management Problems of Enterprises" issued by the Supreme Court of Public Security on March 6, 2022, it can be seen that the compliance management of enterprises is to "strengthen pre, in-process control, and post supervision within the framework of complying with legal provisions.". Returning to tax compliance, its compliance framework is to comply with the provisions of the Tax Collection and Management Law. The Tax Collection and Management Law is a procedural law that regulates both tax collectors and payers, providing for the determination of taxpayers' tax obligations and the nature of tax related violations. The construction of corporate tax compliance should take the "Tax Collection and Management Law" as the framework to standardize the treatment of tax related matters of enterprises, to prevent enterprises from underpaying taxes or evading taxes and other illegal acts.

3、 Tax compliance should attach importance to entity tax compliance based on industry characteristics

As mentioned above, tax compliance means preventing tax related risks for enterprises. Designing a compliance system within the framework provided for in the Tax Collection and Management Law is nothing more than requiring enterprises to recognize revenue on schedule, file tax returns on schedule, prepare accounts and maintain accounting books in accordance with the law, and eliminate illegal activities such as tax evasion and underpayment. However, this approach is still relatively general. Based on the author's years of practical experience in tax dispute resolution, tax related risk points vary from industry to industry. For example, in the online live streaming industry, the distinction between the personal income tax of the anchor and the income from labor remuneration or wages and salaries is problematic; Whether the input invoices obtained by industries engaged in bulk commodity transactions such as coal trade comply with regulations; Whether the wages and salaries paid by labor service enterprises before tax are actually incurred; Whether there is ticket change sales in petrochemical enterprises; Whether the land value-added tax liquidation of real estate enterprises is compliant; Whether the tax declaration of the automobile leasing industry distinguishes between transportation services and tangible movable property leasing services; Compliance issues with pre tax deduction vouchers in the renewable resources industry, and so on.

Therefore, the tax compliance system itself should be regulated within the framework of the "Tax Collection and Management Law", combined with the characteristics of the industry in which the enterprise is located, and combined with the common tax related risk points of this type of enterprise in practice. After the main framework design is completed, the focus should be on making special precautions against points prone to tax related risks.

4、 Tax compliance should do good after the supervision mechanism

As mentioned earlier, the compliance management of enterprises is "to strengthen pre, in-process control, and post supervision within the framework of complying with legal regulations.". The design of the tax compliance framework and the key prevention measures for industrial tax related risks are both pre and interim controls. In the construction of tax compliance, it is also necessary to cooperate with the construction of the corporate compliance system itself and establish an ex post supervision mechanism for enterprises.

In the existing tax collection and management system, there are two ways to exempt enterprises from liability after the event. One is to voluntarily make up the tax declaration or timely report after the tax authority notifies if the enterprise fails to file the tax declaration on schedule; One is to conduct self inspection and make up for tax after "tax self inspection". Both of these methods require payment of taxes and late fees, while avoiding fines and legal risks. We believe that in order to isolate tax risks, enterprises should cooperate with professional institutions or establish specialized personnel within the enterprise to conduct regular self inspections of their tax related matters, and resolve possible tax risks after self inspections. Therefore, in the construction of corporate tax compliance, adjustments should be made to the internal governance structure of the enterprise, and relevant departments for tax risk control should be set up for the enterprise.

5、 Summary

From the tax evasion cases of Sydney and Weiya to the tax evasion cases of Dunlun, the three words "big data" can be seen in the statement of the tax bureau on the source of the case, indicating that the era of big data pushing clues to the source of the case has arrived and is widely used in the tax inspection and case selection process. The tax big data includes not only the collection and management data of the tax department, but also the big data of other departments, such as industry and commerce, customs, banking, market supervision, and other departments. By integrating all the data, it can achieve multi-angle tax analysis of relevant enterprises and individuals. In the future, the "Golden Tax Phase IV" system will be upgraded and launched, and more institutions' information data will be accessed to achieve more comprehensive monitoring of enterprise business. At that time, the tax, industrial and commercial, social security, banking and other data of enterprises can be exchanged at any time, making it easier to identify tax violations. Therefore, enterprises should carry out the construction of tax compliance system and enterprise compliance system as soon as possible.