A few days ago, the Supreme Prosecutor, in response to a reporter's question, released data and the latest trend of compliance and rectification of enterprises involved in the case; as of December 2022, a total of 5,150 compliance cases were handled nationwide, and decisions not to prosecute were made in accordance with the law in respect of 1,498 enterprises and 3,051 people who had been rectified and complied with the law. The data shows that criminal compliance has given full play to the institutional function of saving real enterprises, urging them to return to the right path from crime and eliminating as much as possible the negative impact of crime. At the conference, the person in charge of the Supreme Prosecutor's Office also made new statements on the scope of application and procedures of the compliance policy for enterprises involved in cases, releasing positive signals. This article combines the criminal compliance features of tax-related crimes and looks forward to the next corporate compliance trends of tax-related crimes.

I. Supreme Prosecutor's Q&A Releases Positive Signals on Criminal Compliance

(I) High compliance and rectification pass rate of enterprises involved in cases, good compliance effect

According to the data, as of December 2022, a total of 5,150 criminal compliance cases were handled nationwide, of which 3,577 cases (accounting for 69.5% of all compliance cases) were cases applying the third-party supervision and assessment mechanism, representing an increase of 3,825 and 2,976 cases, respectively, compared with the full-scale push in early April 2022; 1,498 enterprises and 3,051 people who had rectified and passed the compliance were subject to a decision not to prosecute according to the law. In addition, only 67 enterprises failed the supervisory assessment, and the enterprises or persons in charge of the enterprises were prosecuted for criminal liability in accordance with the law. The data shows that the effectiveness of compliance and rectification of the enterprises involved in the case is good, and the vast majority of the enterprises and their responsible persons have the motivation and ability to carry out and improve the compliance system of the enterprises and implement the compliance and rectification plan under the pressure of the criminal liability, and ultimately, through the assessment of the third-party agency, achieve the good result of not prosecuting, so as to realize the purpose of saving the entity enterprises.

(II) Gradual expansion of the scope of application of criminal compliance policy

(1)Rising proportion of cases with statutory penalties of more than three years

The person in charge of the Supreme Prosecutor's Office made it clear that, in the cases where criminal compliance is applied to enterprises involved in the case, the proportion of cases with statutory penalties of more than three years and cases where the lenient system of guilty plea and lenient system is applied to make light and lenient sentencing recommendations has been gradually increasing, which indicates that the length of the sentence is not a determining factor as to whether or not criminal compliance is applied, and that this may be able to turn around the prudent application of criminal compliance by some of the local procuratorates to cases where the sentence is likely to be a term of imprisonment of more than three years, This may be able to reverse the status quo of some local procuratorial organs that are cautious in applying criminal compliance to cases that may be sentenced to more than three years' imprisonment, and resolutely refrain from applying criminal compliance to cases that may be sentenced to more than ten years.

(2)The number of areas with full coverage of criminal compliance has risen

The person in charge of the Supreme Prosecutor's Office said that the grassroots prosecutor's office coverage of compliance cases is constantly improving, of which 13 provinces, autonomous regions and municipalities, such as Beijing, Tianjin, Hebei, Liaoning, Jilin, Shanghai, Jiangsu, Anhui, Shandong, Hubei, Guangxi, Chongqing, Guizhou, etc., have already realized the full coverage of compliance cases.

(3)Not limited to unit crimes, as long as "closely related to production and business activities" can be

As the purpose of criminal compliance is to save the entity enterprise, so at present the industry basically formed only unit crime can apply the view of criminal compliance. However, the person in charge of the Supreme Prosecutor's Office said clearly that we should "accurately grasp the conditions for the application of enterprise compliance, and actively and steadily explore the application of compliance inspection procedures for felony cases". That is, for a number of criminal law sub-principles of the criminal law does not provide for unit crimes, as long as it meets the case-related enterprise compliance reform pilot document "closely related to production and business activities" conditions, can be included in the scope of the pilot cases of compliance reform. Thus, compliance reform for enterprises involved in cases is not limited to cases of unit crimes; criminal compliance can also be carried out for individual crimes related to the production and operation of the enterprise.

(III) Moving forward the criminal compliance process for enterprises involved in cases

Since the pilot compliance program for enterprises involved in cases has not increased criminal proceedings, in current practice, procuratorial authorities mostly utilize the period for reviewing and prosecuting to carry out criminal compliance, which is a relatively short period of time. Some large enterprises may not be able to completely complete the compliance, or may not be able to resume the normal production and operation of the enterprise in a short period of time. This time, the person in charge of the Supreme Prosecutor's Office said that the procuratorial authorities can intervene in the investigation in advance, to begin to carry out compliance preparations, as early as possible to carry out compliance preparations to help the case into the examination and prosecution of high-quality compliance inspection, better able to play the compliance "to protect the enterprise" "to protect employment "and other social functions.

II. Outlook on the movement towards the application of criminal compliance for tax-related crimes in 2023

(I) Criminal compliance is applicable to tax-related crimes with a statutory sentence of less than 10 years

(1)More than 3 years of statutory imprisonment will no longer be the threshold for compliance

In order to prevent the criminal compliance policy from becoming a tool for some wrongdoers to commit crimes, at the initial stage of the pilot program of criminal compliance, some local procuratorates have adopted a very cautious attitude towards the cases that may be sentenced to more than three years of imprisonment. However, among the tax-related crimes, due to historical reasons, the statutory penalties for the crimes of false issuance of VAT invoices and fraudulently obtaining export tax refunds are extremely heavy.

At the present stage, the main factors for determining the circumstances of the crime of fraudulent export tax rebate in terms of larger amount, huge amount and especially huge amount are the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Laws in the Trial of Criminal Cases of Fraudulent Export Tax Refunds (Legal Interpretation [2002] No. 30), which was issued in 2002. According to the Notice of the Supreme People's Court on Relevant Issues Concerning the Conviction and Sentencing Criteria for Fraudulently Issuing VAT Special Purpose Invoices (Law [2018] No. 226), the amount criteria for conviction and sentencing in criminal cases of fraudulent issuance of VAT special purpose invoices also refer to the Interpretation of the Legal Interpretation [2002] No. 30. Accordingly, if the amount of tax fraud or false invoicing is over 500,000 yuan, it can be sentenced to 3-10 years of imprisonment, and if it is over 2.5 million yuan, it can be sentenced to over 10 years of imprisonment. In today's rapid economic development, the amount of the above circumstances stipulated appears to be too low, which also leads to the possibility of sentencing the crime of fraudulent invoicing and tax fraud to more than 3 years of imprisonment at any time, which creates difficulties in applying compliance to the case of fraudulent invoicing and tax fraud crimes.

However, it should be noted that the relevant provisions of the pilot compliance program for enterprises involved in the case do not require a statutory penalty, in other words, the application of compliance to cases with statutory penalties of more than three years or even more than ten years is not a violation of the regulations. In April 2022, at a meeting of the Supreme People's Procuratorate in conjunction with the All-China Federation of Industry and Commerce (ACFIC) dedicated to deploying a comprehensive roll-out of the pilot reform of compliance for enterprises involved in cases, it was emphasized that the application of compliance to cases with statutory penalties of more than three years' imprisonment should be subject to a unified review and approval of the procuratorate at the provincial level, in order to avoid lawbreakers from escaping culpability. Therefore, with the Supreme Prosecutor's clear more than 3 years of cases can be applied to compliance, part of the false opening, tax fraud cases into compliance with the rectification process less a threshold, more conducive to saving the entity enterprise.

(2) In practice, tax-related criminal cases over 10 years old are still mostly handled separately.

Although more than three years of cases can enter the compliance program, but in practice we still regret to see, if the amount of tax fraud or tax fraud more than 2.5 million yuan, the person in charge of the compliance rectification can not be obtained through the non-prosecution of the decision, even if you want to carry out compliance, the procuratorate will also be divided into cases to deal with, to the enterprise to carry out compliance, and to pursue the person in charge of the criminal responsibility.

As early as in "The Supreme People's Procuratorate issued four typical cases of enterprise compliance reform pilot case No. 2: the case of Shanghai Company A, Company B and Guan Moumou's false VAT invoices", due to the fact that the case of false VAT invoices were issued for a total of 219, with a total of more than 2.887 million yuan of price and tax, of which more than 4.19 million yuan of tax has been declared as deduction, even though the enterprise and the person in charge paid back the tax after the case was found to have been dealt with by a separate case, and the enterprise carried out compliance, and the person in charge, Guan Moumou, was sentenced to three years' imprisonment and five years' probation.

Recently, Prof. Chen Ruihua disclosed in his article "Special Compliance Program in Enterprise Compliance and Rectification" (published in Politics and Law Forum, Issue 1, 2023) a case of false invoicing that was handled in separate cases. As the enterprise was suspected of the crime of false VAT invoicing that caused a loss of more than 1.2 billion yuan of state taxes, the procuratorial authorities took a separate case handling approach to the case, that is, while prosecuting a number of directly responsible persons of the enterprise At the same time, the procuratorial authorities initiated conditional non-prosecution proceedings against the enterprise.

(II) Compliance Programs Moved Forward, Leaving Enough Time for Enterprises to Resume Normal Production

The acceptance of the compliance rectification of the enterprises involved in the case is particularly important to whether the enterprises can resume normal production and operation order after the rectification.2022 In September 2012, the Procuratorate of Shanxi Province announced a batch of typical cases of compliance of the enterprises involved in the case, of which the second case is the case of "the case of the false VAT invoices issued by three coal washing enterprises in the city of Jiehou, Jinzhong". According to the disclosure of the case, only two of the three coal washing enterprises that carried out the compliance successfully passed the assessment of the third party organization. One enterprise failed to pass the assessment of the third-party organization due to the delay in paying all taxes and the expiration of the compliance rectification period, and still did not have the conditions for resumption of work and production, and was found to be falsely rectified and prosecuted according to the law.

In practice, once an enterprise is caught in tax-related crimes such as false opening and tax fraud, it will first face the recovery of taxes, late payment fees and penalties, which brings a heavy economic burden to the enterprise in the first place. At the same time, the person in charge of the main business is investigated, the books of accounts are locked, and the production and operation of the enterprise will come to a standstill. At this point, if only the period of review and prosecution by the procuratorial authorities is utilized to carry out compliance and rectification, some enterprises may not be able to complete the compliance and rectification plan and at the same time resume normal business activities. This time, the Supreme Prosecutor's statement that the procuratorial authorities can intervene in the investigation stage in advance has brought a new program for carrying out criminal compliance in cases of false opening and tax fraud, namely:

When the investigating authorities request the procuratorial authorities to review the coercive measures for the responsible personnel, the lawyers and other personnel should timely express their opinions and views to the procuratorial authorities about the cases that can be applied to the compliance rectification, and request the procuratorial authorities to intervene in the investigation of the cases in advance, and to handle the non-custodial coercive measures for the main responsible personnel, such as release from custody, awaiting trial, or residence under surveillance, and to maintain the basic order of the enterprises while cooperating with the investigations and to carry out the compliance programs and measures for the enterprises in advance. (iii) Entering into compliance and rectification procedures.

(III) Entering into the compliance and rectification program of tax-related criminal enterprises, basically achieving good results

At present, the difficulty of enterprise compliance rectification mainly lies in the difficulty of initiating criminal compliance procedures, and the procuratorial authorities maintain strict auditing standards, which is one of the reasons for the current high compliance rectification pass rate, i.e., the procuratorial authorities realize the feasibility and necessity of assessing the compliance rectification of enterprises, and will not pass the compliance application of those enterprises that are unlikely to pass the assessment of compliance rectification. In the field of tax-related crimes, as mentioned above, high statutory penalties are the main threshold that prevents enterprises from carrying out compliance. In addition, whether enterprises can refund the full amount of taxes and illegal income, and whether the business model is reasonable, are also important factors in whether enterprises can carry out compliance.

III. Matters that should be taken into account in applying compliance to tax-related crimes in 2023

(I) Compliance initiation aspects

(1)Actively paying taxes and refunding illegal income

In the process of compliance and rectification of the enterprises involved in the case, the procuratorial authorities and third-party organizations value the enterprises' attitude of pleading guilty, i.e., the enterprises and the persons in charge should firstly plead guilty and admit the punishment. In tax-related crimes, it is a prerequisite to initiate compliance for enterprises to actively pay late tax payments and refund illegal income to recover the state's tax losses.

(2)Emphasis on misdemeanor defense to reduce the expected penalty period

Due to the rapid development of economic life, some emerging crimes are controversial in the application of the crime. For example, petrochemical alteration ticket type cases are controversial between tax evasion crimes and false opening crimes; some false opening crimes and illegal purchase crimes possess similarity, etc. Due to the high statutory penalties for the crimes of false VAT invoicing and fraudulent export tax rebate, the defense lawyers should start from the defense of innocence and misdemeanor, correcting the erroneous identification of the crime and the identification of the amount, or proposing mitigating circumstances such as self-surrender to lower the sentence in order to apply the compliance rectification.

(3)Take the initiative to explain the rationality of the business, put forward the feasibility of compliance

Whether compliance can be carried out also depends on whether the enterprise has the value of salvage. If the enterprise has a good prospect, employs a large number of people, and the business has reasonableness, compliance can generally be carried out. However, if the business model of the enterprise is unreasonable and there is a suspicion of intentional false opening, it may not be possible to initiate compliance. For case officers, in cases of significant and complexity, they will also be cautious in applying compliance due to the fear that compliance and rectification will allow the wrongdoer to escape culpability. In such cases, the enterprise concerned should actively communicate with the procuratorial authorities, mainly explaining that the enterprise's business model is reasonable, real and in line with the general situation of the market. In addition, if the enterprise and its principals are subjectively negligent or have been deceived, it will be easier to convince the case officers.

(II) Compliance rectification process and acceptance

The enterprise involved in the case should formulate a "special compliance program" to ensure that the compliance program is targeted and feasible. First of all, enterprises should sort out and identify the causes of their tax-related crimes, treat and deal with them as major special compliance risks, and formulate targeted plans to prevent similar cases from recurring. For example, if the enterprise purchases goods in the case of "separation of tickets and goods", it should strictly audit the preliminary due diligence of the business process, contract conclusion, invoice inspection, goods inspection, etc.; if the enterprise has been fraudulently and falsely invoiced by its employees, it should improve the approval of the business and strengthen the substantive approval.

In addition to the crime itself, enterprises should also establish a basic compliance management system, after the certification standard for compliance management system - national standard GB/T35770-2022 "Compliance Management System Requirements and Guidelines for the Use of the" was officially released and implemented, the enterprise can be based on national standards, the establishment of a proven Compliance Management System.

(III) Emphasize the "second half of the article" after passing the compliance rectification.

The Supreme Prosecutor has called for the elimination of false compliance and paper compliance, and emphasized the "second half of the article" of compliance, i.e., enterprises and their responsible persons will be randomly inspected from time to time to check their compliance rectification after they have passed the compliance assessment. Although no enterprise has yet been adversely affected by a post-compliance inspection, enterprises should focus on the long-term operation of their compliance systems as their compliance policies are improved.