Recently, a case of withdrawn Notification of Proven False Openings has triggered a wide debate. Proven single plays an important role in invoice violation cases, which safeguards the realization of the state's tax claims, but the problems of risk transfer and double taxation brought by it have also made it highly questionable. In practice, the application of certified single has become more and more common, how to deal with the tax risk of certified single has become a topic that enterprises have to study. This article starts from the case of withdrawal of certificated document, elaborates on the legal consequences and actionability of certificated document, and provides three specific measures to deal with the tax risk of certificated document.

I. Case Introduction: Downstream tax authority recognized the existence of real goods transaction, and upstream tax authority decided to withdraw the Certificate of Exemption.

Company A is an energy company engaged in metal trading and processing, and Company B is an iron and steel company, which previously purchased metals worth RMB 100 million from Company A. As Company A had fled and lost contact with Company B, the VAT invoices issued to Company B were recognized as false VAT invoices, and Company A's affiliated tax bureau issued a Notification of Proven False Invoicing to the competent tax authority of Company B. Company B was unable to contact Company A for verification of the transaction, so Company B objected to the withdrawal of the Notification of Proven False Invoicing. As Company A had fled and lost contact with Company B, Company B was unable to contact Company A to verify the situation, therefore Company B raised objection to the competent tax authority, claiming that the VAT invoice issued by Company A was not falsely issued. After investigation and verification, the competent tax authority of Company B sent a "Letter of Response to the Concordance of Tax Violation Cases" and a "Report of Concordance of Tax Audit Cases" to the tax bureau of Company A, which concluded that there was a real transaction of goods between Company A and Company B, and then the tax bureau of Company A withdrew the Notice of Confirmed False Invoicing issued by it.

II. Legal analysis: the legal consequences of the certified documents are different, the enterprise does not necessarily face the tax adjustment

(I) Legal Basis of Certified Orders

Article 9 of the Notice on the Issuance of the Administrative Measures for Co-Investigation of Invoice in Tax Violation Cases (for Trial Implementation) (Tax General Issuance [2013] No. 666) stipulates: "For the co-investigation of confirmed false invoicing cases, the commissioning party shall issue the Notification of Proven False Invoicing Sheet and the relevant evidential information in the form of one letter for one household by the commissioned party, and affix an official seal on the list of attached invoices page by page, and Send it to the entrusted party together with the Letter of Concordance for Tax Violation Cases. If the letter of concurrence for confirmed false invoicing cases is initiated through the concurrence information management system, the entrusted party shall send the Notification of Confirmed False Invoicing and relevant evidential information within five working days after sending the entrusted concurrence information."

The above provisions clarify the specific circumstances and processes for the tax authorities to issue the Notification of Confirmed False Invoicing, giving practical significance to the confirmed form. At present, the general understanding of the legal nature of the Proven False Openings Notice is that it is an internal administrative instrument of the tax authorities, which belongs to the process instrument, and after the downstream tax authorities receive the Proven False Openings Notice, they shall carry out the case inspection based on the provisions of Article 15 of the Measures for the Administration of Invoice Co-ordination in Tax Violation Cases (for Trial Implementation) and the process stipulated in the Provisions on the Procedures for Handling Tax Inspection Cases.

(II) Legal Consequences of Certified Sheets

Article 9 of Circular No. 666 states that the Notice of Proven False Invoicing is based on the fact that the upstream tax authority has determined that the VAT invoice issued by the upstream enterprise is a "false VAT invoice", therefore, the downstream enterprise may bear the following legal consequences:

First, constituting the act of allowing others to falsely issue VAT invoices for itself

According to Article 21 of the Measures for the Administration of Invoices, "No unit or individual shall engage in the following acts of false invoicing: (1) issuing invoices for others or for oneself that do not correspond to the actual business situation; (2) letting others issue invoices for oneself that do not correspond to the actual business situation;" The VAT special invoices issued by upstream enterprises are recognized as false invoices. special invoices is recognized as false invoicing, the downstream enterprise may be recognized as letting others issue false invoices for themselves that are inconsistent with the actual operation of the business, which constitutes invoice violation and is subject to administrative liability.

In addition, according to Article 205 of the Criminal Law, "Falsely issuing VAT special invoices or falsely issuing other invoices used for fraudulently obtaining export tax refunds or tax credits refers to those who have engaged in one of the behaviors of falsely issuing for another person, falsely issuing for oneself, letting another person falsely issue for himself, or introducing another person to falsely issue for himself." Downstream businesses suspected of having others falsely open for themselves may also face criminal liability for false opening.

Meanwhile, if the business involved does not meet the constitutive elements of the crime of false opening, but the downstream enterprise knows that the VAT invoice issued by the upstream enterprise is false opening, and still accepts it and uses it for input tax credit, it may be sentenced to the crime of unlawfully purchasing VAT invoices as stipulated in Article 208 of the Criminal Law, and be investigated for criminal liability.

Second, being recognized as using the falsely issued VAT invoices for tax deduction, constituting tax evasion

According to Article 1 of the Circular of the State Administration of Taxation on the Handling of Issues Concerning the Acquisition of Fraudulently Issued VAT Special Invoice by Taxpayers (Guoshuifa [1997] No. 134, hereinafter referred to as "No. 134"), "If the party to be invoiced makes use of other people's fraudulently issued special invoices, and declares the offsetting of tax to the tax authorities, it shall, in accordance with the provisions of the State Administration of Taxation, evade tax. In case of tax evasion, the tax shall be recovered in accordance with the Law of the People's Republic of China on Administration of Tax Collection and the relevant regulations, and a fine of less than five times the amount of tax evasion shall be imposed; if the input tax is greater than the output tax, the input tax retained shall also be adjusted downward. Where fraudulent export tax rebates are carried out by utilizing falsely issued special invoices, the tax shall be recovered in accordance with the law and a fine of up to five times the amount of tax fraud shall be imposed." Therefore, in practice, the downstream enterprises maliciously obtaining false VAT invoices will not only be punished according to the relevant provisions of the Measures for the Administration of Invoices, or will be recognized by the tax authorities as using false invoices for tax evasion, and shall recover the tax and impose a fine less than five times of the amount of the fraudulent tax, and if the enterprises are unable to make up for the tax and the fine in a timely manner, they will be faced with the criminal responsibility of the crime of tax evasion.

Third, being recognized as obtaining falsely issued VAT invoices, but not characterized as tax evasion

Where the available evidence only proves that the upstream enterprise has falsely issued VAT invoices, but the evidence is not sufficient to prove that the downstream enterprise has obtained falsely issued VAT invoices in bad faith, it should not be characterized as tax evasion. In practice, some tax authorities and courts support the above viewpoint, but the treatment does not identify the downstream enterprise as having obtained the falsely issued VAT invoices in good faith, resulting in the downstream enterprise not being able to apply the relevant provisions of the Circular of the State Administration of Taxation on the Handling of Issues Concerning the Acquisition of False VAT Invoice by Taxpayers in Good Faith (Guoshifa 〔2000〕 No. 187), hereinafter referred to as the Document No. 187, which is the relevant document of the State Administration of Taxation. No. 187, hereinafter referred to as "Document No. 187").

Fourth, being recognized as acquiring the falsely issued special VAT invoices in good faith

No. 187 stipulates that: "There is a real transaction between the purchaser and the seller, the seller uses the special invoice of the province (autonomous regions, municipalities directly under the central government and municipalities with separate plans) in which it is located, and all the contents of the special invoice such as the name of the seller, the seal, the quantity of the goods, the amount and the amount of the tax etc. stated in the special invoice are in line with the actual situation, and there is no evidence to show that the purchaser knows that the special invoice supplied by the seller is obtained by illegal means. Illegal means to obtain, the purchaser shall not be punished for tax evasion or fraudulent export tax rebates. However, no input tax credit or export tax refund shall be granted in accordance with the relevant provisions; the input tax credit or export tax refund already granted by the purchaser shall be recovered in accordance with the law." That is, if the following four conditions are met, it can be recognized as a bona fide acquisition:

1. There is a real transaction between the purchaser and the seller;

2. The seller uses the special invoice of his province;

3. All the contents of the special invoice, such as the name of the seller, the seal, the quantity of the goods, the amount and the amount of tax, etc., are consistent with the actual situation;

4. There is no evidence that the purchaser knew that the special invoice provided by the seller was obtained by illegal means.

Fifth, being recognized as the existence of real goods transactions, withdrawal of the certified single

In the case mentioned above, the downstream enterprise actively communicated with the affiliated tax authority to make the tax authority recognize that the business between it and the upstream enterprise was a real goods transaction, and then pushed the upstream enterprise's affiliated tax bureau to withdraw the "Notification of Confirmed False Invoicing". The case did not disclose whether the downstream tax authority required the enterprise to carry out the transfer of input tax, but if the Certified VOI Notice was withdrawn, the offsetting behavior of the downstream enterprise might be deemed not to cause the loss of state tax, and thus the downstream enterprise would not be dealt with.

(III) Transfer of input tax of VAT

In addition to administrative and criminal liabilities, the different treatment results mentioned above will have an impact on the VAT deduction of the enterprises. For enterprises that are considered to have allowed others to falsely issue VAT invoices for themselves, it is very likely that they will also be deemed to have constituted the "use of falsely issued VAT invoices to offset tax", and will be required to recover tax according to the provisions of Circular No. 134, late payment fees and impose a fine of up to 5 times of the amount of tax according to the provisions of Circular 134. For the third result above, if the enterprise does not constitute tax evasion or bona fide acquisition, the tax and late payment fee will be recovered.

For the good faith acquisition of falsely issued VAT invoices, according to the "Reply to the Issue of Late Payment Charges on Taxpayers' Good Faith Acquisition of Falsely Issued VAT Invoices with Tax Credits" (Guo Shui Han 〔2007〕 No. 1240), "no late payment charges shall be levied on the bona fide acquisitions, and the enterprises can deduct the input tax if they obtain the exchange of the invoices for those without invoices", enterprises need not pay the late payment charges. ", the enterprise is not required to pay late payment fees, and if the enterprise can obtain legitimate invoices or relevant certificates in a timely manner, there is no need to transfer the input tax amount.

For the withdrawal of certified documents, if the tax authorities believe that the enterprise's offsetting behavior will not result in the loss of state tax, and thus will not deal with the downstream enterprises, then the enterprise does not need to make adjustments to the input tax amount.

(IV) Pre-tax deduction of enterprise income tax

According to Article 12 of the Measures for the Administration of Pre-tax Deduction Vouchers for Enterprise Income Tax, "Enterprises obtaining invoices that are not in compliance with the regulations, such as privately printed, forged, altered, voided, illegally obtained by the invoicing party, falsely issued, or filled out in an unstandardized manner, as well as obtaining other external vouchers not in compliance with the national laws, regulations and other relevant provisions, shall not be used as pre-tax deduction vouchers. " Enterprises obtaining falsely issued VAT invoices shall not be used as pre-tax deduction vouchers. In practice, some tax authorities do not distinguish whether the enterprise obtains falsely issued VAT invoices in bad faith or not, and based on the provisions of this article, they determine that the amount of invoices obtained by the enterprise shall not be deducted before tax, and the enterprise shall pay back the tax and late payment fees.

In practice, there are different views on the deduction of income tax for non-malicious acquisition of falsely issued VAT invoices, such as the view that if the tax authorities have no evidence to prove that the enterprise accepts falsely issued invoices in bad faith, the enterprise shall be exempted from the late payment fee for the unpaid tax. At the same time, if the enterprise can prove that the invoice in question is the actual cost incurred and has been deducted before tax, the enterprise should be allowed to make pre-tax deduction and should not be processed as an increase in enterprise income tax. This view was supported by some courts.

III. Analysis of justiciability: the certified list generally does not have the external effect, it is difficult to realize justiciability

(I) If the Proven Sheet is used as an audit trail, it is not actionable.

In the case of co-inspection, the Upstream Tax Authorities sent the Confirmed Void Opening Notice and the corresponding evidence information is the direct cause of the downstream enterprises facing the audit, however, the downstream enterprises' reconsideration and litigation remedies are blocked, and some of the enterprises hope to save the country by suing the Upstream Tax Authorities in the way of Confirmed Void Opening Notice. However, from the point of view of the type of instrument, the Notice of Proven False Openings belongs to the documents of investigation between tax authorities in different places, which is only for the internal use of the tax authorities, and does not directly serve the administrative relative, and does not directly affect the rights and obligations of the relative, therefore, most of the courts are not admissible in practice.

(II) In line with the "externalization of internal behavior", the "certified single" is justiciable.

In 2016, the supreme people's court issued the 22nd guiding case "Wei Yonggao, Chen Shouzhi v. people's government of lai'an county to recover the land use right approval case", recognized the "internal behavior externalization" of the justiciability: the internal administrative act does not serve the relative, the rights and obligations of the relative has not yet had a practical effect on the rights and obligations of the relative. The internal administrative act does not serve to the relative, the relative's rights and obligations have not yet produced actual impact, generally does not belong to the scope of administrative litigation, but if the administrative organ subsequently did not produce and serve the external legal instrument, but directly based on the internal instrument, it should be recognized as the internal instrument has been actually implemented and externalized to the external legal effect of the specific administrative act, and therefore has a justiciable nature. Therefore, if the competent tax authorities of the invoiced enterprise directly recover the tax and late payment from the enterprise on the basis of the "Notice of Proven False Invoicing", the recovery action of the tax authorities violates the property rights and interests of the invoiced enterprise, and the invoiced enterprise may initiate administrative litigation against the "Notice of Proven False Invoicing".

IV. Risk Response: Evidence is king in certified invoice cases, and enterprises need to pay attention to the right of statement and defense

(I) Evidence is king: downstream enterprises should argue that the invoices do not constitute false invoicing from the facts of the transaction

According to the "Announcement of the State Administration of Taxation on the Issues Related to the External Issuance of VAT Specialized Invoices by Taxpayers" (Guoshifa [2014] No. 39), "Taxpayers evade taxes by inflating VAT input tax amounts, but the external issuance of VAT special invoices is not external false VAT special invoices if it is in line with the following circumstances at the same time: firstly, the taxpayer sells goods or supplies VAT special invoices to the recipient party. First, the taxpayer has sold goods, or provided VAT taxable services or taxable services to the taxpayer; second, the taxpayer has collected the money for the goods sold, taxable services or taxable services provided to the taxpayer of the party to be invoiced, or has obtained the vouchers to demand for the money for the sales; third, the contents of the VAT invoice issued by the taxpayer to the taxpayer of the party to be invoiced in accordance with the regulations are in conformity with the goods sold, taxable services or taxable services provided, and the VAT invoice is in conformity with the VAT invoice. Thirdly, the contents of the special VAT invoice issued by the taxpayer to the taxpayer of the invoicee in accordance with the regulations are consistent with the goods sold, taxable labor services provided or taxable services provided, and the special VAT invoice is legally obtained by the taxpayer and issued in its name. The VAT special invoice obtained by the taxpayer of the recipient party can be used as a VAT deduction voucher to offset the input tax amount." Combined with the relevant provisions of No. 187, it can be seen that, whether it is determined that the enterprise does not belong to the false invoicing or that the invoicee party obtains the invoice in good faith, it is necessary for the enterprise to confirm that there is a real purchasing and selling relationship between the enterprises from the factual point of view.

In the case described in this article, the downstream enterprise, that is, from the perspective of real goods trading transactions, the downstream tax authorities recognized the authenticity of the business, promoting the withdrawal of the Notice of Confirmed False Invoicing. In the case of "Confirmed False Opening Notice", the downstream enterprise will face a longer tax investigation stage, during which the enterprise can repeatedly state its defense to the tax authorities, submit complete business information, and break the tax authorities' suspicion of the authenticity of the business between the two parties.

(II) Rights relief: downstream enterprises should pay attention to the right of statement and defense and cooperate with the tax authorities in investigation and evidence collection

Some enterprises believe that once the Notice of Confirmed False Invoicing is issued, it will definitely affect the tax deducted by the downstream enterprises. However, in practice, there may be a large number of invoices issued by the upstream enterprises and the upstream tax authorities may not be able to verify each one of them, which may lead to bias in the conclusion of their determination. Or due to the upstream enterprise has fled and lost contact and other factors, resulting in the tax authorities can not be investigated and verified, which led to the upstream tax authorities to make the determination of false invoicing. It can be seen from this case, in the upstream enterprise has fled and lost contact with the state, the downstream enterprise actively communicate with the tax authorities, not only makes the downstream enterprise recognized the authenticity of the two sides of the business, and makes the upstream enterprise tax authorities withdrew the previous false opening determination.

It can be seen that, in the case of "confirmed false opening notice", although the downstream enterprises usually do not have the right to initiate administrative reconsideration or administrative litigation and other administrative procedures, but it has the right to the tax authorities to state its defense, which plays a key role in promoting the tax authorities to make a decision in favor of the enterprise.

(III) Multi-handed preparation: the first choice is to withdraw the certificate, and the second choice is to obtain the certificate in good faith.

As far as the enterprise is concerned, the most preferred option is to persuade the tax authority under which it belongs to conclude that the VAT invoices issued between it and the upstream enterprise are based on real goods transactions and do not constitute false invoicing, and to push for the withdrawal of the certified invoices. However, in terms of the legal nature of the Notice of Proven False Invoicing, it is applicable to the "concurrent investigation of confirmed false invoicing cases", which means that the upstream tax authority has already made a determination of false invoicing on the enterprise, and therefore, the downstream tax authority will usually adjust the tax amount of the enterprise in practice. In view of this, the enterprise should make two preparations, in addition to actively striving for not constituting false invoicing to the tax authorities, it should also propose to the tax authorities in due course that it constitutes a bona fide acquisition of false VAT invoices, and at the same time request the upstream enterprise to exchange or reissue the VAT invoices, or submit relevant explanations for the impossibility of exchanging or reissuing the VAT invoices to the tax authorities in order to strive for the avoidance of the transfer of the input tax amount and the unfavorable consequences of the adjustment of the enterprise income tax.