Since August 26, 2021, when the "Tax Case Notification" column was launched on the official website of the State Administration of Taxation, several typical cases have been announced. From the typical cases published by the State Administration of Taxation from January 2022 to now, we can roughly predict the key industries and targets for tax inspection this year.

1、 Petrochemical industry

Case: The Inspection Bureau of Liaoning Provincial Taxation Bureau investigated and dealt with cases of some enterprises evading the consumption tax on refined oil according to law

January 19th, 2022

At the beginning of 2021, the Inspection Bureau of the Liaoning Provincial Taxation Bureau found that some enterprises in Panjin City, Liaoning Province were suspected of falsifying invoices and evading the consumption tax on refined oil in a large amount based on relevant information and reflection as well as analysis of tax big data. Subsequently, under the guidance and supervision of the State Administration of Taxation and the People's Government of Liaoning Province, the Inspection Bureau of the Liaoning Provincial Taxation Bureau conducted an in-depth investigation together with relevant departments.

Upon investigation, Panjin North Asphalt Fuel Co., Ltd., Liaoning Baolai Bioenergy Co., Ltd., and Panjin Haoye Chemical Co., Ltd. have evaded the consumption tax on product oil by falsifying the name of production equipment, using false VAT invoices as a means, and changing the taxable product oil into non-taxable chemical product sales. The Inspection Bureau of Liaoning Provincial Taxation Bureau investigated and dealt with the enterprises involved in the case according to law. They failed to pay off the taxes, overdue fines, and fines within the prescribed time limit. The relevant personnel were suspected of constituting the crime of falsely issuing special VAT invoices and evading payment of taxes, and have been transferred to the judicial authorities according to law. The public security organ has arrested the actual controller of the enterprise involved and the relevant suspect and taken compulsory measures, and the procuratorial organ is reviewing and prosecuting according to law. The relevant departments have seriously dealt with public officials suspected of violating disciplines, violating laws, and neglecting their duties in accordance with the law, and have transferred those suspected of committing crimes to the judicial authorities.

In the process of investigating and handling cases, relevant departments and local governments have always insisted on distinguishing between severely cracking down on illegal criminals and maintaining normal production and operation of enterprises, and have actively taken a series of effective measures to ensure stable production and operation of enterprises. Currently, the staff of the enterprise involved is stable, and the production operation is stable.

The relevant person in charge of the Liaoning Provincial Taxation Bureau stated that the next step will be to resolutely investigate and strictly deal with various tax evasion behaviors in accordance with the law, resolutely safeguard the authority of the national tax law, promote social fairness and justice, continue to create a good tax business environment, and promote the long-term standardized and healthy development of relevant enterprises and industries.

Comments: Since the launch of the refined oil module in the third phase of the Golden Tax in 2018, the illegal act of evading consumption tax by changing invoices for refined oil has become more easily identified, and tax issues that extend to the processing, production, transportation, and sales of refined oil, as well as the sales and transportation of crude oil, have become the focus of tax inspections. The cases of fraudulent invoicing and consumption tax evasion in the petrochemical industry are characterized by large amounts of money, long transaction chains, and wide cross regional boundaries. The first tax related case announced by the General Administration this year points to the petrochemical industry, which is sufficient to illustrate that the petrochemical industry remains the key inspection industry this year.

2、 Tax related intermediary service industry

Case 1: The tax department of Urumqi City, Xinjiang investigated and dealt with an intermediary tax related illegal case according to law (slide down to view)
January 26th, 2022

Recently, during the investigation and handling of a case of fraudulent invoicing, the tax department of Urumqi City in the Xinjiang Uygur Autonomous Region discovered that Yan Huiping, the legal representative of Urumqi Genduoduo Financial Consulting Co., Ltd., and several independent tax related service personnel helped criminal gangs issue value-added tax invoices and seek illegal benefits. Therefore, they conducted tax inspections in accordance with the law.

Upon investigation, Yan Huiping and several independent tax related service personnel colluded with fraudulent gangs to falsely register a shell company under the cover of a tax agent, illegally handle real-name authentication, change registration, receive invoices, and act as bookkeeping agents, illegally apply tax preferential policies for epidemic prevention and control, and falsely issue invoices to the outside world. 17000 invoices were falsely issued, with a total value and tax of 1.594 billion yuan.

Currently, the People's Court of Shayibak District, Urumqi City has legally sentenced 18 defendants to imprisonment ranging from 8 months to 15 years for the crime of falsifying value-added tax invoices, confiscating all illegal income and imposing corresponding fines. Among them, Yan Huiping was sentenced to fixed-term imprisonment of one year and six months, while other tax related service personnel were sentenced to fixed-term imprisonment ranging from 8 months to 7 years.

The relevant person in charge of the Urumqi Municipal Taxation Bureau stated that, in the next step, the tax department will further strengthen cooperation with relevant departments, and on the basis of normalizing and accurately cracking down on "fake enterprises", "fake exports", and "fake declarations", severely crack down on "black intermediaries" involved in tax that help illegal individuals obtain tax benefits and evade taxes. At the same time, strengthen daily supervision, strengthen the guidance and management of tax related intermediary agencies, further standardize tax related professional services, and effectively maintain normal tax order.

Case 2: The tax department of Hechi City, Guangxi Province investigated and dealt with an intermediary tax related illegal case according to law (slide down to view)
January 26th, 2022

Recently, when the tax police of Hechi City, Guangxi Zhuang Autonomous Region jointly investigated and dealt with criminal gangs that falsely issued value-added tax invoices, they discovered that two intermediaries, Guangxi Nandan County Liuji Accounting Service Co., Ltd. and Jiangxi Nancheng County Minghua Accounting Service Co., Ltd., as well as Zhang Lijun, an agent bookkeeper in Nandan County, had provided assistance to criminal gangs in falsely issuing value-added tax invoices and sought illegal benefits.

According to investigation, between 2020 and 2021, two intermediary agencies and Zhang Lijun helped criminal gangs obtain and falsely issue 18712 value-added tax invoices, totaling 1.808 billion yuan in value and tax, and illegally made profits from the 25 individual industrial and commercial households they represented without any actual business happening.

Currently, the People's Court of Nandan County has sentenced members of criminal gangs, intermediary agencies, and individuals to imprisonment ranging from 1 to 14 years for the crime of falsely issuing special value-added tax invoices, confiscating all illegal income, and imposing a corresponding fine. Among them, four people, including Chen Liuji, the legal representative of Guangxi Nandan Liuji Accounting Service Co., Ltd., Zhong Yaoming, the legal representative of Jiangxi Nancheng Minghua Accounting Service Co., Ltd., and Xu Hongyan, the main staff member, and Zhang Lijun, the bookkeeping agent of Guangxi Nandan County, were sentenced to imprisonment ranging from 1 to 3 years for the crime of falsely issuing special value-added tax invoices.

The relevant person in charge of the Hechi City Tax Bureau said that relevant intermediary agencies have helped criminal gangs falsify invoices and evade taxes, seriously disrupting the economic tax order and endangering national tax security. In the next step, the tax department will work with relevant departments to continue to maintain a high-pressure posture of severely cracking down on illegal and criminal acts of tax fraud. At the same time, it will conduct joint inspections on intermediary agencies and personnel that assist in tax fraud and evasion, and seriously handle them in accordance with the law, creating a legal and fair tax environment.

Comments: On April 24th, the State Administration of Taxation, the State Internet Information Office, and the State Administration of Market Supervision and Administration issued a notice on "Standardizing Tax-related Intermediary Services and Promoting the Healthy Development of the Tax-related Intermediary Industry.". The notice clearly states that tax related intermediary services should be further standardized, and efforts should be made to address issues such as providing tax planning services in violation of regulations, helping taxpayers evade tax, publishing illegal and illegal information on various WeMedia and Internet platforms to solicit business, distorting and interpreting tax policies, and disrupting the normal tax order. According to the illegal cases of tax related intermediaries reported on the official website of the State Administration of Taxation, the tax related intermediary service industry has become a key industry for this year's inspection.

3、 Webcast, entertainment industry

Case: The tax department of Guangzhou City, Guangdong Province handled the case of online anchor Ping Rong's tax evasion according to law (slide down to view)
February 22, 2022

Recently, the tax department of Guangzhou City, Guangdong Province, conducted a comprehensive and in-depth tax inspection on the online anchor Ping Rong (net name: Lv Sao Ping Rong) who was suspected of tax evasion through tax big data analysis.

According to investigation, during the period from 2019 to 2020, Ping evaded personal income tax of 19260500 yuan by concealing the commission income from live streaming, and did not declare other production and operation income according to law, underpaying relevant taxes of 14507200 yuan.

During the tax inspection process, Ping Rong was able to actively cooperate with the inspection and actively pay taxes. Taking into account the above situation, the Guangzhou Municipal Taxation Bureau's Inspection Bureau, in accordance with the Individual Income Tax Law of the People's Republic of China, the Law of the People's Republic of China on the Administration of Tax Collection, the Law of the People's Republic of China on Administrative Penalties, and other relevant laws and regulations, has imposed a penalty of 0.6 times on Pingrong in accordance with the "Guangdong Provincial Tax System's Tax Administrative Penalty Discretionary Benchmark", which amounts to 6200300 yuan. A few days ago, the Inspection Bureau of Guangzhou Municipal Taxation Bureau has delivered a written decision on tax administrative punishment to Pingrong in accordance with the law.

The relevant person in charge of the Guangzhou Municipal Taxation Bureau stated that the tax department will continue to strengthen the analysis and application of tax big data, improve targeted tax regulatory measures for the online live streaming industry, severely crack down on tax related illegal activities, and promote the industry to develop in a standardized manner.

Comments: On March 30th, the State Internet Information Office, the State Administration of Taxation, and the State Administration of Market Supervision and Administration jointly issued the "Opinions on Further Regulating the Profit Making Behavior of Webcast to Promote the Healthy Development of the Industry". In order to strengthen tax collection and management, the opinion also requires that online broadcast platforms and online broadcast service institutions should fulfill their individual income tax withholding and payment obligations in accordance with the law, and should not transfer or evade their individual income tax withholding and payment obligations, and should not plan or assist online broadcast publishers in implementing tax evasion. Enterprises and individual studios run by webcast publishers should set up accounting books in accordance with relevant national regulations. Whether viewed from the release of policies or the intensity of inspections, this year is still a year of strict tax supervision over the online live streaming industry. At the same time, judging from the star tax cases exposed earlier this year, the cultural and entertainment industry is still a key inspection industry.

4、 Normalization target: fraudulent export tax refund

Case 1: The tax department of Jiujiang City, Jiangxi Province investigated and dealt with a case of fraudulent export tax refund (slide down to view)
January 26th, 2022

Recently, the tax department of Jiujiang City, Jiangxi Province, together with the public security department, investigated and dealt with a false tax fraud case according to law, captured 23 suspect and destroyed 16 criminal dens.

Upon investigation, the criminal gang created the illusion of false production by registering multiple enterprises and purchasing waste and second-hand equipment, fraudulently obtaining export tax rebates through false invoicing, low value and high reporting, falsifying contracts, and buying and selling foreign currencies. It falsely issued 33230 special VAT invoices, with a total value at tax of 5.141 billion yuan, and fraudulently obtained export tax rebates of 131 million yuan. The case has been prosecuted by the procuratorial organ according to law.

The relevant person in charge of the Jiujiang City Tax Bureau in Jiangxi Province stated that, in the next step, the tax department will make full use of tax big data to promote the transformation from punishment of illegal and criminal acts such as fraudulent tax payment to accurate prevention in the past. At the same time, relying on the working mechanism of the six departments of taxation, public security, procuratorial work, customs, the People's Bank of China, and foreign exchange management to jointly crack down on tax related illegal and criminal acts, we will continue to maintain a high-pressure posture in cracking down on tax related illegal and criminal acts such as fraudulent tax evasion, and accurately and effectively crack down on illegal and criminal acts such as "fake enterprises," "fake exports," and "false declarations.".
Case 2: The Shenzhen tax department investigated and dealt with a fraudulent export tax refund (slide down to view)

January 26th, 2022

Recently, the tax department of Shenzhen City found that some enterprises have abnormal export commodities through tax big data analysis, and quickly established a joint task force with the Shenzhen Public Security Department to conduct in-depth investigations according to law. In August 2021, the joint task force of tax and police carried out the network closing operation, successfully defeated 5 criminal gangs that used "LED lights" and other commodities to open up, "order distribution", tax fraud and other criminal gangs, and captured 32 suspect.

Upon investigation, after obtaining a falsely issued VAT special invoice, the tax fraud gang colluded with the "distribution" company to obtain customs declaration documents in violation of regulations to defraud export tax rebates, involving 7 tax fraud enterprises and defrauding export tax rebates of 44.78 million yuan. Currently, the case has been transferred to the procuratorial organ for review and prosecution.

The relevant person in charge of the Shenzhen Municipal Taxation Bureau stated that the taxation department will follow the work deployment of six departments to regularly crack down on "fake enterprises", "fake exports", "fake declarations" and other tax related illegal and criminal acts, adhere to a zero tolerance attitude to "fight when exposed" tax illegal and criminal acts, ensure national tax security, maintain economic tax order, and optimize the tax business environment.
Case 3: The tax department of Quanzhou City, Fujian Province investigated and dealt with a case of fraudulently issuing special VAT invoices to obtain export tax rebates (slide down to view)

March 15th, 2022

Recently, the tax department of Quanzhou City, Fujian Province, together with the public security, the People's Bank of China and the foreign exchange management department, used the comprehensive analysis of big tax data and abnormal foreign exchange collection data to jointly uncover a case of fraudulent issuance of VAT special invoices to defraud export tax rebates, involving more than 70 upstream invoicing enterprises, 22 foreign trade export enterprises, and 36 suspect.

Through departmental collaboration, the four departments conduct analysis, research, and judgment on the entire chain of information, and implement precise strikes. Upon investigation, the criminal gangs led by Wang Jiale and other five individuals used the foreign trade companies and upstream shell production enterprises under their actual control to fabricate export trade businesses, defraud the state of export tax rebates, falsely issued over 6800 special invoices for value-added tax, totaling 724 million yuan in value and tax, and defrauded over 83 million yuan in export tax rebates. Recently, the case will be transferred to the procuratorial organ for review and prosecution.
The relevant person in charge of the Quanzhou Municipal Taxation Bureau stated that in the next step, efforts will be made to play the role of the working mechanism of the six departments to jointly crack down on tax related illegal activities, and effectively crack down on "fake enterprises", "fake exports", and "false declarations" in a normal and efficient manner. In particular, serious tax related illegal activities such as gang formation, violent false invoicing, and fraudulent tax refund will be strictly investigated and dealt with to effectively maintain good tax order.

Comments: On October 28, 2021, the State Administration of Taxation, the Ministry of Public Security, the Supreme People's Procuratorate, the General Administration of Customs, the People's Bank of China, and the State Administration of Foreign Exchange jointly held a special action summary and normalization work deployment meeting in Beijing to crack down on "fake enterprises", "fake exports", "fake declarations", false invoices, fraudulent tax refunds, and tax preferences. "Normalization" is sufficient to illustrate that false accounting cases will remain the focus of tax inspection work in 2022.

5、 Target of severe crackdown: fraudulent withholding and tax refund

Case 1: Hebei Investigates and Punishes a Production Enterprise's Fraud of Tax Deduction and Refund (Slide Down to View)
The Special Office of the State Administration of Taxation in Beijing organized the tax inspection department of Chengde City, Hebei Province, to investigate and deal with a production enterprise suspected of obtaining false invoices, falsely increasing input tax, and fraudulently obtaining tax rebates based on suspicious clues screened by the tax big data. Upon investigation, the enterprise obtained 29 false invoices and fraudulently obtained a tax refund of 1931000 yuan. Currently, the tax department has transferred the case to the public security organ for investigation, and will impose heavier penalties according to law and investigate the criminal responsibility of relevant personnel.

Case 2: Guangdong investigated and dealt with a case of an intermediary service enterprise fraudulently obtaining tax retention, offset, and refund (slide down to view)
According to the analysis of the reporting clues, the tax inspection department of Zhuhai City, Guangdong Province, found that an intermediary service enterprise was suspected of obtaining false invoices to falsely increase the input tax amount, defrauding a tax refund of 41000 yuan, and suspected of falsely issuing invoices to outsiders. After a joint investigation with the public security department, it was determined that the enterprise was one of the enterprises actually controlled by a criminal gang that accepted false invoices to defraud tax rebates. Currently, the tax department has transferred the case to the public security organ for investigation, and will impose heavier penalties according to law and investigate the criminal responsibility of relevant personnel.

Case 3: Jiangxi Investigates and Punishes a Mining Company's Fraud of Tax Refund and Tax Evasion (Slide Down to View)

The tax inspection department of Ganzhou City, Jiangxi Province, based on big data analysis, investigated and dealt with cases of fraud in obtaining value-added tax rebates and tax evasion by Dayu County Minxin Tungsten Industry Co., Ltd. Upon investigation, the enterprise did not declare and concealed sales revenue of 8.1815 million yuan through personal collection, and also illegally enjoyed low tax rates or preferential tax exemptions to transfer sales revenue of 13.373 million yuan through registration of a small shell taxpayer enterprise. The total amount of tax evasion was 3.6504 million yuan, and the amount of tax refund fraud was 786400 yuan. The tax inspection department has legally recovered a total of 3.6504 million yuan from enterprises for tax evasion, and plans to impose a penalty of one time and an additional late payment fine in accordance with the relevant provisions of the Administrative Penalty Law of the People's Republic of China and the Tax Collection and Management Law of the People's Republic of China; Recovering 786400 yuan of tax rebates fraudulently obtained by enterprises, and in accordance with the relevant provisions of the "Administrative Penalty Law of the People's Republic of China" and the "Tax Collection and Management Law of the People's Republic of China", it is proposed to impose a double fine.

Case 4: The Inspection Bureau of Liaoning Provincial Taxation Bureau investigated and dealt with cases of some enterprises evading the consumption tax on refined oil according to law (slide down to view)

The tax inspection department of Lhasa City, Tibet, investigated and dealt with the case of Tibet Hongli Tire Trading Co., Ltd. defrauding value-added tax retention and refund based on the analysis clues of the tax big data of the Autonomous Region Bureau. Upon investigation, the enterprise reduced the output tax and fraudulently obtained a tax refund of 305000 yuan by collecting sales funds from individuals to conceal the company's sales revenue and making false declarations. The tax inspection department pursues the payment of the tax withheld, offset, and refunded by the enterprise in accordance with the law, and plans to impose a fine of one time in accordance with the relevant provisions of the Administrative Penalty Law of the People's Republic of China and the Tax Collection and Management Law of the People's Republic of China.

Case 5: Liaoning investigated and dealt with a case of a transportation enterprise fraudulently obtaining tax rebates against retention

The Liaoning Province Liaoyang City Tax Inspection Department investigated and dealt with the case of Liaoyang Shuanghe Cargo Transportation Co., Ltd. fraudulently obtaining value-added tax retention and refund based on the clues sent by the superior risk. Upon investigation, the enterprise reduced the output tax by using personal bank cards to collect freight and conceal the company's business income, making false declarations, and fraudulently obtained a tax refund of 108100 yuan. The tax inspection department pursues the payment of the tax withheld, offset, and refunded by the enterprise in accordance with the law, and plans to impose a fine of one time in accordance with the relevant provisions of the Administrative Penalty Law of the People's Republic of China and the Tax Collection and Management Law of the People's Republic of China.

Comments: According to the 2022 "Government Work Report", a large-scale tax refund will be implemented for the tax withheld and offset this year, and it is estimated that the tax withheld and offset for the entire year will be about 1.5 trillion yuan. Subsequently, the executive meeting of the State Council further clarified the policy arrangements, and the finance and tax departments issued a series of implementation rules. According to the latest statistics, in the half month since the implementation on April 1, 420.2 billion yuan has been reserved to offset the accounts of 527000 taxpayers who have "fallen into the bag" of tax refunds. While relieving the pressure on enterprises to withdraw funds through tax rebates, the state is bound to strengthen its efforts to crack down on fraudulent tax rebates and avoid the illegal loss of tax sources.

summary

From the typical cases exposed by the State Administration of Taxation since January 2022, the key areas of tax inspection this year are still the petrochemical industry and other large trade industries, tax related intermediary services industry, online live streaming industry, and cultural and entertainment industry. The key targets of the crackdown are cases of falsely issuing special invoices for value-added tax, cases of falsely issuing tax frauds, and cases of fraudulently obtaining tax retention, offset, and refund. With the application of tax big data, tax violations in various industries and fields are easy to identify. Enterprises should attach importance to tax compliance and do a good job of risk prevention.