Fraudulent export tax refunds have always been a key target of the fight because they cause huge losses to the country's tax money and jeopardize the order of export tax administration. At the same time, the administrative and criminal liability for fraudulent export tax rebates is also extremely heavy. In the light of the suspension of the right to export tax refunds, payment of taxes, late fees, fines, or face criminal liability of up to life imprisonment. In order to better strengthen the majority of foreign trade industry enterprise compliance, to prevent problems before they occur, this paper examines the State Administration of Taxation since 2022 publicized cases of fraudulent export tax refunds, the reasons for the outbreak of the case, the trigger to be summarized for the reader's reference.

I.Tax fraud case trigger: why the foreign trade tax-related risks broke out?

(I) Clues discovered by tax authorities through daily inspections

Tax authorities need to manage a considerable number of taxpayers in their jurisdictions, so some actors have a lucky break and think that they will not be inspected in general. However, in fact, it is not uncommon for tax authorities to discover clues of tax-related violations during daily inspections, which in turn lead to major cases. As early as in 2013, "9.13" Ding Yong, Liu Lu gang case, is because the tax authorities found that the enterprise purchase and sale of product name serious mismatch, sales greater than the purchase, no freight occurs, no funds to settle, and as a production and processing enterprises tax burden rate is low, and then found that the fact of false opening. At present, with the strengthening of the tax authorities' ability to collect and manage taxes, the key supervision of large enterprises and enterprises in key areas within the jurisdiction has been initiated, as well as the sampling inspection of "Double Random and Open", which makes it easy to break out the risks of fraudulent tax rebates and false openings during the daily inspection by the tax authorities, which is in turn passed on to the exporting enterprises. In addition, the export enterprises themselves are also the object of inspection, so they can reasonably respond to the daily inspection of the tax authorities by strengthening their own tax compliance.

(II) Tax Big Data Pushes Abnormal Information

At present, tax supervision is increasingly evolving from "relying on reports to discover illegal clues" to "relying on tax big data to investigate clues", and a number of cases of fraudulent export tax rebates have been investigated due to the analysis of tax big data.2022 On July 22, 2012, the Qingdao Municipal Taxation Bureau, based on the tax big data, sent out abnormal information to export enterprises. On July 22, 2022, Qingdao Municipal Taxation Bureau detected a case of fraudulent export tax rebate based on the analysis of tax big data and customs export data, and finally discovered the fact that the tax fraud group fraudulently issued VAT invoices through fictitious purchase of agricultural products, and fraudulently purchased and matched the invoices to cheat the tax. At the current stage, tax big data mainly relies on the invoice information of enterprises, for example, as a trading enterprise, the names of imported and exported goods are seriously inconsistent; the imported goods are not raw materials for selling goods. If the tax authorities' information is correlated with that of other departments, more anomalous clues can be found, such as inconsistencies between the invoicing area and the shipment trajectory, or that the number of invoices for the purchase of agricultural products significantly exceeds the local production capacity, leading to the outbreak of cases.

(III) Referral of clues from other departments such as customs and other tax authorities

With the joint investigation of cases and data interconnection among the six departments, it has become a common cause of risk outbreak for other departments to discover clues of tax fraud and then transfer them to the tax authorities.2022 On July 22, 2022, the Cangzhou Municipal Tax Bureau of Hebei Province, based on the source of suspected fraudulent export tax refunds forwarded by the Tianjin Customs, found that there were anomalies in the export of goods by some fur enterprises and thus detected a case of fraudulent false invoicing.2022 In October 2021 In October 2021, Fujian Public Security and Taxation Departments detected a case of false invoicing and fraudulent export tax rebate based on the clues transferred by the local People's Bank of China and Foreign Exchange Administration Branch. Due to the multiple links, long process and multi-departmental involvement in export tax rebate, the risk of tax fraud may break out in multiple links. For example, the Customs and Excise Department examines whether the customs declaration and transportation documents match; the foreign exchange department examines whether the collection of foreign exchange is normal.

(IV) Industry and domain census to discover clues of violation of law

The State Administration of Taxation (SAT) relies on tax big data to regulate the tax situation in the country on a macro level. If the data shows anomalies in certain industries and fields, the SAT will supervise specific regions and industries to carry out large-scale tax inspections to detect tax-related risks.2021 In November 2021, as 34 enterprises in Henan and Hunan exported an amount of 1.874 billion yuan in a short period of time, the SAT's Special Office in Guangzhou, together with the public security and tax departments of Henan and Hunan, as well as the Customs anti-smuggling departments, carried out inspections and A huge case of export tax fraud in the leather and mushroom industries was finally detected. Similar cases are not uncommon. If the General Administration or provincial bureaus find an abnormality in a certain region, industry or even an enterprise, they can issue a letter to supervise the relevant case, which will lead to an outbreak of risk.

(V) through others to report the discovery of illegal clues

Through others to report is also a common trigger for the outbreak of risk. For example, in Huaihua City, Hunan Province, the tax inspection department investigated and dealt with a case of false VAT invoices issued by a gang in cooperation with the public security department, the People's Bank of China and other departments based on the tip-off, and in 2018, the First Inspection Bureau of Hangzhou City detected a case of false invoices issued by nearly 1,000 enterprises based on a report letter of more than a hundred words. Therefore, enterprises are fearless of being reported by others only if they have done a good job of tax compliance themselves.

II. Analysis of the main behavior of foreign trade tax-related risk formation and tax fraud

(I) Utilizing the difference of tax rebate rate and falsifying the export of goods with high tax rebate rate

Export tax rebate is a tax preference of the state, therefore, for the goods that the state encourages to export, its tax rebate rate is high, and even can be comparable with the value-added tax rate of the goods; for the goods that the state doesn't encourage to export, its tax rebate rate is low, or even 0 tax rebate rate. The former, such as textiles, clothing, toys, and the latter, such as gold, silver and other precious metals. Therefore, there are some actors through the false declaration of the name and other behavior, the low tax rebate rate of goods forged for high tax rebate rate of goods, so as to cheat the export tax rebate; there are also actors through a simple change in the form of goods, such as gold, silver, simple processing and then falsely claimed that it is a high-tech products, so as to cheat the export tax rebate. Therefore, textiles, garments and other industries are the hardest-hit areas of tax fraud, and are also areas of strong supervision.

(II) Fraudulent Tax Fraud by Using the Characteristics of Agricultural Products Acquisition Invoice

Agricultural products as a fraudulent export tax rebate "tool", has been commonplace. As the export tax rebate needs input invoice, and the agricultural products acquisition invoice is easy to apply for, self-opening and self-crediting, the enterprise can simply through the fictitious identity information of farmers, forged acquisition and transaction information, falsely open the agricultural products acquisition invoice, so as to become the "source" of false invoices, and through the intermediate over the invoice enterprises down the false invoices until the export enterprises with false invoices to apply for tax rebates. The invoices are then used by export enterprises to apply for tax refunds. Formally recognizing that the purchase invoices of agricultural products can easily be used for tax fraud, the State has carried out tax inspections on agricultural products for many times, and a number of false invoicing cases have broken out, implicating many export enterprises.

(III) Utilizing cross-border e-commerce and other tax-exempt products to "buy orders and match tickets"

Buying orders and matching tickets are now increasingly becoming the main means of tax fraud crimes. The goods under the method of buying single ticket are real, mainly some customs declaration and freight forwarding companies, which have got hold of some export tax-free goods information, such as the goods purchased directly from the domestic market by foreign merchants (including Chinese doing business abroad), the goods of cross-border e-commerce, and the goods exported by small-scale taxpayers, etc. The customs declaration or freight forwarding company will summarize a similar batch of goods, which will be exported by small-scale taxpayers. The freight forwarder or customs broker aggregates a similar batch of goods and sells the customs declaration illegally. After obtaining the customs declaration, the perpetrator uses the export enterprise to declare the export (the so-called "purchase order"), and then falsely opens the corresponding VAT invoices (the so-called "matching invoices"), so that the exported goods, which are not eligible for tax rebate, are turned into high-tax-rebate commodities, and thus fraudulently obtains the tax rebate. (d) Utilizing the right of export tax refund

(IV) Utilizing the right of export tax rebate to carry out non-compliant exports

As the right to export tax rebates need to apply for, and for the qualification of the enterprise is very strict, some enterprises with foreign trade needs can not export goods on their own. However, some enterprises have obtained the right to export tax rebates, but they do not have the need to export goods, so they will carry out the business of export agency. However, there are some export enterprises that are not in compliance with the business, resulting in the emergence of "fake self-management, real agent" or "four from three missing" situation, which is used by the perpetrators to fall into the risk of fraudulent export tax rebates.

III. How can enterprises cope with the risk of tax fraud that has erupted?

(I) Export enterprises implicated in false invoicing upstream and actively provide information to defend themselves

As mentioned before, the export tax rebate has many links and a long process, especially the goods invoice held by the export enterprise, which is obtained after many times of circulation. If the source of the invoice has the problem of false invoicing, it may lead to the risk of false invoicing along the chain of invoices, and ultimately lead to the export enterprises to suffer from the "undeserved disaster" of not being able to refund taxes. Especially when the fact of false invoicing has not been clarified, the relevant business of the export enterprise will face the unfavorable consequences of being suspended, withholding tax refund and being required to provide guarantee. Moreover, since there is no legal deadline for suspending or withholding export tax refunds, it all depends on the direction of the upstream cases, which is not conducive to the protection of the interests of export enterprises. Many exporters are trading enterprises with thin margins that rely on tax refunds for survival, and may find it difficult to survive as a result.

Therefore, in the event of an upstream false invoicing and downstream disputes, foreign trade enterprises should actively seek ways to remedy their rights. First, they should actively make representations and defense with the tax authorities to explain the legality of the business. In particular, it should advocate the application of the Announcement of the State Administration of Taxation on Relevant Issues Concerning Taxpayers' External Issuance of VAT Special Invoices (Announcement No. 39 of 2014 of the State Administration of Taxation), and strive to get the tax authorities to recognize the legitimacy of the invoices. If there is difficulty in claiming the Notice No. 39 of 2014, it can retreat to claim good faith acquisition to avoid the VAT suffering adjustment.

(II) Seize the opportunity of statement and defense in the tax audit procedure

The criminal liability for fraudulent export tax rebates is extremely heavy, so enterprises should avoid being referred to the criminal, which means that they need to grasp the tax audit procedure. In the event of tax fraud dispute, the tax authorities should communicate with the parties before making the conclusion of the tax audit, and at the same time, the parties have the right to make statements and plead their case, and the tax authorities should listen to them and explain the reasons for adopting or not adopting them. Therefore, before the conclusion of the tax audit is issued, the enterprise should actively coordinate with the relevant departments to explain to the tax authorities the reasons why it does not constitute tax fraud and provide evidence. If the tax authorities intend to make a penalty decision to the enterprise, the enterprise enjoys the right to apply for a penalty hearing, and can utilize the penalty hearing to further explain the legality of its own business. In addition, enterprises may also make full use of the remedial channels of reconsideration and administrative litigation.

(III) Avoiding the outbreak of criminal risk in the case of fraudulent export tax rebates

As the criminal risk of fraudulent export tax rebate is extremely heavy, and the judicial authorities especially rely on the professional processing of tax authorities, especially the determination of the flow of goods, capital flow, and the flow of single bills, the enterprise should properly keep the supporting materials that can prove the existence of real goods transactions and real export, make use of the tax audit procedure, and carry out active and effective communication with the tax authorities, and strive for the resolution of disputes in the administrative procedure.

If the public security authorities intervene or the case has been transferred, the enterprise and its responsible personnel will directly face criminal risks. At this time, professionals should be hired early to assist the enterprise in sorting out the enterprise materials and explaining to the investigating authorities the reasons and opinions that do not constitute the crime of tax fraud. For example, in terms of invoices, according to the circumstances of invoicing, whether there is a return of funds, etc. to investigate the entire transaction chain in the acquisition, production, sales process is normal; through auditing and other means of specific tax-related issues, including the determination of the amount of tax, the characterization of the crime and other issues to make professional judgments, and so on. Due to the heavy sentence in tax fraud cases, which gives the investigating and judicial authorities great psychological pressure and affects the judgment of the case officers on the criminal composition, therefore, only solid legal opinions and evidence materials can better persuade the case officers.

(IV) In the criminal procedure, put forward the defense that it is not a tax fraud crime

Combined with the current judicial precedents, the following situations do not belong to the crime of tax fraud.

1. The evidence is insufficient to prove that the enterprise has the intention to cheat tax or knows that others cheat tax, which does not constitute the crime of tax fraud.

This kind of situation mostly appears in the export enterprises in violation of the agency export, that is, the export enterprises of the "false self-management, the real agent" or in the intermediary bring their own customers, bring their own source of goods, bring their own bill of exchange, their own customs clearance and the export enterprises do not see the export products, do not see the supplier, do not see the foreigners (i.e., the four from the three do not see). ") in the case of transactions, and later found that the export is false, the export enterprises face the defense of complicity in tax fraud. However, according to the current jurisprudence and judicial interpretations, only the export enterprise has the intention of tax fraud, that is, knowing that others intend to cheat the state export tax rebates still violate the violation of the agent, only to constitute the crime of tax fraud.

2. Did not cause the consequences of tax fraud, does not constitute the crime of tax fraud.

This situation occurs in the case of overstating the export price of goods, due to some cases of tax fraud, enterprises and foreign collusion, the low value of the goods will be overstating the price of goods, used to fraudulent export tax rebates. However, the price of goods in a market economy is a normal situation. If there is no false opening or the investigation of collusion with foreign businessmen, there is no equivalent relationship between the overstated export price and the fraudulent export tax rebate.

3. The export business links in the evidence of factual ambiguity, insufficient evidence should be found not guilty.

The links of export tax rebate are complex, involving goods procurement (input VAT invoice acquisition), customs clearance for export (customs declaration, freight bill, etc. acquisition), foreign exchange collection and settlement (bank filing documents acquisition), declaration of export tax rebate, etc. Therefore, the case-handling authorities need to check around the above links one by one and ultimately on the alleged facts of the crime to form a complete chain of evidence. If the facts are unclear, the evidence is insufficient and reasonable doubt cannot be eliminated, the crime of tax fraud will not be constituted. Enterprises should sort out the information involved in each link, including documents, certificates, tickets, contracts, etc., and defend themselves against the manner in which the business was conducted and the authenticity of the goods shipped out of the warehouse.

IV.How can foreign trade enterprises strengthen tax compliance?

(I) Strengthen the knowledge of tax law to ensure export compliance

The export tax law is complex and numerous, and some foreign trade enterprises and business personnel lack understanding of the tax law related to export tax rebates, and even lack of correct knowledge of the basic export methods such as "self-supporting" and "agency", which leads to tax-related risks. Therefore, foreign trade enterprises must pay attention to tax compliance to avoid tax risks.

(II) Conduct business prudently and focus on risk investigation and prevention and control

To strengthen tax compliance, foreign trade enterprises should sort out, review and rectify their export business in accordance with the currently effective tax policies in order to comply with the provisions of the tax policy, especially the control of upstream suppliers. At present, many of the risks in the export sector of the enterprise is difficult to control, then for the administrative level of possible risks, should be controlled through the civil level of the realization of the agreement.

(III) Actively participate in various types of compliance training and obtain information in multiple ways

Through the tax lawyers, tax accountants, accountants, and industry associations, the legal profession organized compliance training, can help foreign trade enterprises to understand the latest industry trends and tax authorities, the latest direction of action of the judiciary, concerns and attitudes towards legal issues, measures to deal with, etc.. In order to identify tax risks and improve the business model. If necessary, professionals can be hired to carry out corporate tax health checks.