The State Administration of Taxation (SAT) proposed on April 9 at the "Symposium for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in" that "reverse invoicing" for resource recovery enterprises should be realized by the end of April, and stated: "Further smooth the VAT ded uction chain through the implementation of "reverse invoicing", and give resource recycling enterprises standardized and legal pre-tax deduction vouchers for enterprise income tax ". If the news of the above-mentioned symposium is accurate, will the reverse invoicing of renewable resources have the dual functions of VAT deduction and pre-tax deduction, thus realizing a similar system design as the current purchase invoices for agricultural products?

However, progress coexists with misgivings. In recent years, cases of fraudulent tax evasion on agricultural products have been repeated, and the risk of the agricultural products acquisition industry remains high. Then the renewable resources industry may face similar tax risks if a similar system is implemented. In order to slow down with the unexpected, this paper from the practice of agricultural products acquisition, predict the reverse invoicing may bring the risk of the point, in order to throw a brick to attract jade, for the reference of the majority of enterprises.

I. the renewable resources industry, "reverse invoicing", will draw on the agricultural acquisition invoice system?

"Reverse invoicing" refers to the invoice issued by the buyer to the seller, mainly used in the seller side of the majority of natural persons, the buyer can not get the invoice from the hands of natural persons in the field. In specific practice, the typical industries and fields involved in "reverse invoicing" mainly include the field of acquisition of agricultural products, automobile sales enterprises purchasing second-hand cars from individuals, and the State Grid purchasing electric power products from users of distributed photovoltaic power generation projects.

In the field of agricultural products acquisition, due to the extensive and decentralized nature of agricultural products production and the large number of farmers, it is objectively impossible to require them to set up individual households or to go to the Tax Bureau to issue invoices on their behalf. Therefore, the current policy on the acquisition of agricultural products requires that: agricultural producers selling self-produced agricultural products are exempted from tax; acquiring enterprises purchasing agricultural products directly from farmers can fill in and offset their own invoices for the acquisition of agricultural products; and agricultural cooperatives selling to the outside world will issue invoices for the sale of agricultural products.

For the renewable resources industry, its similarity with the field of agricultural products acquisition is high:

1.Individuals selling their own used items are exempt from VAT. Similarity with the sale of self-produced agricultural products by farmers, tax exemption;

2.the main body of the sale of waste materials, second-hand goods, the Department of the majority of natural persons. This is also similar to farmers, with a large number of small amount of each transaction, the business is decentralized. These natural person seller lack of initiative to the tax authorities to issue invoices, the objective is also difficult to require natural person sales of second-hand goods are to invoice.

Therefore, historically, the waste materials industry has implemented the "waste materials invoice", and the purchase of agricultural invoices have VAT deduction function, only in 2008 was abolished. This time, the State Administration of Taxation made it clear that the renewable resources industry "reverse invoicing" has the function of deduction, and it may draw on the system of agricultural products acquisition invoice, or even completely copy the model of agricultural products acquisition invoice issuance and collection and management. This for the long-term lack of "source invoice" recycling enterprises, is undoubtedly a major benefit.

However, it is worrying that since the implementation of the agricultural products acquisition invoice system, the agricultural products fraudulent tax cases have repeatedly erupted, seriously harming the interests of the national tax revenue and disrupting the national invoice management system. Therefore, renewable resources enterprises should pay attention to the tax-related risk of agricultural products and its causes in advance, and take precautions in advance to realize sustainable and long-term development and avoid being held administratively liable for tax violations or even assuming serious criminal liability. To this end, this paper summarizes the recent outbreak of cases of agricultural products acquisition invoices.

II. the acquisition of agricultural products invoices are repeatedly involved in false tax fraud - the risk of reverse invoicing remains high.

As the only existing invoice in the "four small invoices", the agricultural products acquisition invoice is the only invoice with VAT deduction function of "reverse invoicing", therefore, the supervision of the agricultural products acquisition invoice is also the most stringent. The State Administration of Taxation (SAT) has clearly pointed out in the press conference that it should focus on the industry with high incidence of false invoicing of agricultural products and concentrate on investigation and handling, and in the press conference of the judicial interpretation on criminal cases of jeopardizing tax collection and management issued by the two high authorities, the Supreme Prosecutor has also pointed out that the industry of agricultural products and other industries is still a high incidence of the false invoicing of tax crimes and emphasized the strengthening of the crackdown on the invoicing. The Supreme Prosecutor also pointed out that agricultural products and other industries are still the high incidence of tax fraud crimes and emphasized the strengthening of the crackdown. Nonetheless, cases of false and fraudulent tax invoicing on agricultural products are still repeated, and in recent years, a number of major cases have broken out around the world.

(i) A company in Yunnan Province fraudulently issued purchase invoices for agricultural products amounting to RMB 200 million.

According to the State Administration of Taxation tax case disclosure, Wenshan Zhuang and Miao Autonomous Prefecture in Yunnan Province, the police and tax jointly investigated and dealt with a case of false invoicing of agricultural products, an agricultural company in Yunnan Province, using the identity of farmers, false purchase of agricultural products acquisition business, false invoices for the acquisition of agricultural products of 3,458, amounting to a total of 200 million yuan.

(ii) The audit department disclosed that a pharmaceutical company had falsely invoiced 1.68 billion yuan in fictitious transactions of Chinese herbal medicines.

In the audit of a social security project, the audit department, through understanding the characteristics of the pharmaceutical distribution industry, data comparison, verification of the enterprise's "three streams", on-site verification of the identity of farmers and local Chinese medicine cultivation, found that a pharmaceutical company through the fictitious acquisition of Chinese herbal medicines, false invoicing of agricultural products purchase invoices of 1.68 billion yuan for the deduction of input tax, resulting in a serious loss of state tax. This led to a serious loss of national tax revenue.

(iii) A trading company in Fujian Province was suspected of falsely issuing invoices for the purchase of agricultural products in the procurement of tea.

The Fujian Provincial Tax Bureau served a trading company with a Notice of Tax Administrative Penalty and a Decision on Tax Treatment. The document states that Company A had a tea company and other 9 companies falsely issue VAT invoices with the name of "tea" of 209 million yuan from September 2019 to March 2023 for it. Tea as a kind of agricultural products, this case traced back to the source of the enterprise is likely to be suspected of false invoicing of agricultural products.

(iv) A biological company in Tianjin used agricultural invoices to obtain export tax rebates of more than 8.5 million yuan.

According to the Tianjin Municipal Taxation Bureau Tax News, the Tianjin Municipal Taxation Inspection Department investigated and dealt with a biological company in Tianjin in accordance with the law through false invoicing of agricultural products, "low-value, high-reporting" declaration of exports to defraud the state of export tax refunds of 8,531,000 yuan, and at present, the case has been transferred to the judicial organs for processing.

(v) Summary: Why are acquisition invoices repeatedly involved in the risk of tax fraud?

Through the above cases, it is easy to see that even under the background of the state cracking down on the false tax fraud of the purchase invoice of agricultural products, the relevant cases are still in a high situation. Therefore, it is necessary to analyze the reasons why the agricultural products purchase invoices repeatedly fall into the tax risk, especially to summarize the crux of the reverse invoicing, the main points, so that we can aim at the target, find the crux of the problem, and give the renewable resources industry "reverse invoicing" warning.

III why is reverse invoicing repeatedly involved in false invoicing and tax fraud? --Take the acquisition of agricultural products as an example

(i) Unlawful elements make use of the invoice's characteristic of "self-opening and self-counterbalancing" to carry out false invoicing.

Agricultural products acquisition invoices have the feature of "self-opening and self-counterbalancing", which provides convenience for lawbreakers to falsely open agricultural products acquisition invoices. At present, the buyer can fill in the VAT invoice management system to select the name of the farmer, identity card number, address and telephone number, bank account and account number and other information to issue the purchase invoice for agricultural products, and then according to the purchase invoice for agricultural products to offset the input tax and pre-tax cost deduction.

However, the characteristics of self-credit are utilized by some unscrupulous elements, in the absence of real purchases from farmers, through illegal means to obtain the identity of farmers and other information, wantonly and falsely open invoices for the purchase of agricultural products, making undue tax benefits.

Similarly, if the renewable resources industry to implement the "reverse invoicing" system, I predict that the difficulty of filling out invoices may be increased compared to agricultural products, but should still be recycled by the recycling enterprises to fill out the seller's personal information. If so, the supporting regulatory system, such as failure to follow up, may lead to invoices to increase the risk of fraud.

(ii) purchase invoices "shall not be issued across the region" and market practice is out of touch with

Agricultural products acquisition invoice false opening, there is also a class of "goods false opening", or "on behalf of the opening type false opening" case. In such cases, the acquisition of real goods purchases, but due to the purchase of agricultural products invoices to fill in the regional restrictions, resulting in the emergence of non-compliance with the invoicing phenomenon. Specifically:

First of all, in order to strengthen the management, the use of agricultural products purchase invoices there are regional restrictions, even if some provinces will be the use of agricultural products invoices extended to the provincial administrative region, but the purchase of agricultural products invoices are still prohibited to use across the province, the acquisition of agricultural products to the enterprise in other provinces has brought difficulties.

With the development of the market commodity economy, a single, small amount of agricultural products have been unable to meet the needs of enterprises to further deep-processing products, at the same time, a transaction is no longer limited to a trading place, cross-provincial procurement is the norm. In addition, due to the number of small farmers in China accounted for more than 98% of the main body of agricultural business, enterprises in the objective door-to-door from each farmer to collect hands to buy agricultural products and fill in the purchase of agricultural products invoices to a certain degree of difficulty. Therefore, a large number of intermediaries, large households and other "middlemen".

In this case, some enterprises on the one hand, commissioned the purchase of agricultural products across the provinces of large farmers, agents, middlemen procurement of agricultural products, on the other hand, to collect information on local farmers to fill out the purchase of agricultural products invoices and deductions. As a result, there is a mismatch between the invoice and the actual transaction, and the risk of false invoicing erupts. In the process of tax and public security cases, farmers may not be aware of the existence of the enterprise due to the sale of agricultural products to large households, middlemen, etc., and thus claim that they have not sold agricultural products to the enterprise, and the acquiring enterprise is thus characterized as a false invoice.

At present, it is not clear whether the "reverse invoicing" of renewable resources has regional restrictions. However, according to the "invoice management measures" article 25 of the provisions: " in addition to the State Council tax authorities provide for special circumstances, any unit or individual shall not cross the provisions of the use of the region to carry, mail, transport blank invoices. " Therefore, I predict that the reverse invoicing of renewable resources, there is a certain probability not to be issued across the province, resulting in the recycling enterprise "national acquisition", but only one place to invoice the problem.

(iii) Multi-layer trading structure cannot prevent the transmission of acquisition risk.

For agricultural products processing, foreign trade enterprises, facing the increasingly high risk of fraudulent invoicing, began to establish a "firewall", by building a trade chain in the front end of the transaction, to prevent the risk of fraudulent invoicing of agricultural products acquisition tax fraud. However, although the increase in trading links, in order to save transportation, warehousing, manpower costs, improve business efficiency, and often take instructions for delivery, so that farmers will be transported directly to the agricultural products transported to its production and processing sites.

In this case, the case-handling authorities often because the intermediate link of the enterprise is not involved in the possession of agricultural products, and then question the reasonableness of the business model, and even the authenticity of the intermediate trading links to make a complete denial, that the trading chain of all the enterprises issuing and accepting invoices constitute a false invoicing. If the acquisition invoice is also characterized as false invoicing, the terminal of agricultural products processing, foreign trade enterprises are vulnerable to be implicated.

In the field of renewable resources, this "retailer - renewable resources recycling enterprises - trading enterprises - waste enterprises" chain is very common, the practice has also broken out in similar cases of false invoicing, therefore, the risk of the above acquisition invoice will also break out and conduction, and lead to a sustained risk outbreak.

IV "reverse invoicing", how should enterprises prevent tax risks?

No matter for the agricultural products purchasing enterprises, or for the renewable resources enterprises applying the "reverse invoicing" system in the future, good tax compliance is still a must for their long-term business.

(i) Strengthen the study of the "reverse invoicing" policy, and grasp the authenticity of their own business.

As far as the policy of agricultural products purchase invoice is concerned, there are big differences in the policies of local tax authorities. Enterprises should strengthen their understanding of and comply with the provisions related to the purchase, issuance, use and management of agricultural products purchase invoices and related tax regulations, and avoid filling out invoices with false information about farmers in cases where invoices should not be issued.

In the future, the renewable resources industry or modeled after the agricultural invoice policy to manage its "reverse invoicing", renewable resources companies should also learn about the invoicing policy in a timely manner, according to the law to fill out invoices, so as to achieve compliance with the business. In addition, in the process of operation, attention should also be paid to improve the business process, pay attention to the preservation of business information.

(ii) adhere to the authenticity of the acquisition business, retaining the authenticity of the business materials

In order to avoid the risk of fictitious opening, enterprises must strictly follow the relevant laws and regulations when carrying out the acquisition business, to ensure that all the transactions are really happening, and there is no fictitious or exaggerated transactions. At the same time, enterprises should also establish a perfect internal control system to strictly supervise and manage all aspects of the acquisition business to ensure compliance and authenticity of the business. Retaining materials for the authenticity of the business is an important means of safeguarding the authenticity of the acquisition business. These materials include, but are not limited to, receipts, transportation information, bank flows (WeChat, Alipay payment information, etc.), acceptance slips, photographs, etc., which together constitute a complete chain of evidence for the acquisition business. By properly preserving these materials, the enterprise can provide sufficient evidence to prove the authenticity of the acquisition business when needed, thus effectively avoiding risks such as false invoicing.

(iii) Hire tax professionals to take precautions and responses before, during and after the process

As a matter of fact, one-to-one and point-to-point business transactions really cannot fit in with the current economic development. It is crucial for enterprises to build a reasonable and legal transaction structure model to avoid being denied by the case-handling authorities. Therefore, it is necessary for enterprises to seek the help of tax professionals beforehand to build a reasonable and legal business model to isolate tax risks.

At the same time, tax professionals have more knowledge and experience in the "reverse invoicing" system, so they can also seek guidance from tax professionals in the conduct of specific business. Finally, once the purchase invoice of agricultural products or the future of renewable resources industry "reverse invoicing" suspected of fraudulent invoicing, subject to tax audits or public security investigation, it is even more important to hire tax lawyers to intervene in a timely manner, tax lawyers can be based on the status quo of the industry and the business model of the enterprise, to assist enterprises in organizing the business materials, and combined with the provisions of the tax law and criminal law, from the authenticity of the goods, the state tax system, and the tax law, to the tax law. Provisions, from the authenticity of goods, the loss of national tax, etc., to help enterprises and the case-handling authorities to communicate, and promptly resolve the risk.