This first, Huatax wrote the article "Beware of five categories and sixteen tax risks for small, medium and micro enterprises nowadays! to help small, medium and micro enterprises identify the tax risks they may face in their operations. According to the concept of "identifying and controlling risks to avoid losses" of enterprise compliance, enterprises need to control these risks, and it is best to establish a sound tax compliance system and mechanism. However, in practice, we have observed that some enterprises, especially small, medium and micro enterprises, do not understand and are reluctant to carry out tax compliance, believing that such work can not produce real benefits and costs a lot. We believe that this way of thinking misunderstands the essence of tax compliance and shows that some entrepreneurs have not yet accurately recognized the consequences of tax violations.
The value of tax compliance is: on the one hand, it can "make money" for enterprises, the Ministry of Finance and the State Administration of Taxation have formulated a large number of tax incentives to encourage economic development, and professional tax compliance is needed to make good use of tax incentives for the benefit of enterprises; on the other hand, it can avoid losses, and if an enterprise is suspected of false invoicing or tax evasion, it will always face huge fines and fines. If the enterprise is suspected of fraudulent opening or tax evasion, it may face huge fines at any time, and the entrepreneur may even go to jail. In view of this, Huatax combines some practical cases to reveal and interpret relevant tax compliance points for the majority of SMEs in business development, financial management and accounting, tax declaration, etc., in order to serve the majority of enterprises to establish a sound tax compliance system and avoid tax risks.

I. Business Conduct Segment: Full Process Compliance, More Peace of Mind in Making Money

Point 1: do a good job of cooperation object of the background investigation, identification of shell enterprises

Company A is a trading company, has been the implementation of the "small profits and high sales" business strategy, the supplier is not investigated, as long as there are goods on the line. 2020, Company A was introduced by a friend, from the B company purchased 1 million (including tax) of goods, obtained 13% invoice and deductions, the gross profit of sales of about 30,000 yuan. In 2021, the tax bureau came to the door, said company B is a shell enterprise has fled and lost contact, after the investigation of the goods are not owned by the company B, is "ticket goods separation", in view of the real transaction on the basis of the company A asked to pay about 115,000 input value-added tax and pay late fees. For Company A, this business can be said to be the ultimate loss ......

Enterprises in development will more or less recognize the concept of "business is king", after all, only carry out the business to make money. However, do not pay attention to tax compliance will also make the enterprise serious losses, especially when the invoiced enterprise to bear the invoice face all the taxes. So, how to carry out background checks, especially to prevent the "separation of votes and goods" situation: 1, verification of shell enterprises. By verifying the supplier's business registration information, qualifications, for individual sole proprietorships, late establishment, the registered office is located in the park of the cluster registration, the lack of necessary business equipment and personnel of the enterprise, remain vigilant. 2, verify the source of goods. Check whether the place of shipment of goods is consistent with the place of business of the supplier? If inconsistent require them to explain the reasons and provide proof of their enjoyment of ownership of the goods. If carried out is the transfer of goods right certificate, ask him to provide the bill of lading issued by the upstream suppliers, contracts and other information.

Point 2: Strengthen the contract formation and management system

Enterprise A purchased a batch of goods from Enterprise B on March 1st and sold them to Enterprise C on March 3rd. However, no contract was signed between A and B until the end of April when the settlement of payment for the goods was made up a contract. The tax authorities considered that the authenticity of the transaction between A and B was doubtful, and that there was a possibility of fabrication of the contract and the funds going to the account for false invoicing.

Contract is the starting point of business development and the means to bind the cooperation partner. Therefore, the lack of clearly agreed contract documents when carrying out transactions, especially bulk trade, will make the tax authorities doubt the business and rationality of the transaction, and then doubt the authenticity of the transaction. In addition, contracts must be properly preserved and contract information is an important business material during tax audits.

Point 3: The person in charge of the enterprise should control the business through approvals

Enterprise A is engaged in the purchase and sale of coal, and its head of business, Mr. A, is responsible for the purchase of coal. Later, the tax audit found that Mr. A took advantage of the loophole of lax supervision of the enterprise and privately purchased low-priced coal from small coal mines without invoices, then purchased false invoices and made false contracts to cheat the enterprise's finance. Upon investigation, all of Enterprise A's nearly 100 million dollars of inputs were non-compliant.

In practice, some enterprises' business personnel become the source of tax-related risks, mainly because: 1) business personnel lack of knowledge of tax law, and are not aware of the behavior of vote allocation and false invoicing; 2) business personnel pull business for enterprises without reviewing the business volume in order to increase their performance. Therefore, corporate compliance needs to "collect power", that is, the business sector is responsible for cooperation intention, but the compliance department to follow up the review, the establishment of the approval system, retain the approval materials, to avoid the person in charge of the business "one-handed".

Point 4: Control the authenticity of goods or services, retain business information

For transactions with physical transportation of goods, copies of bills of lading, transportation contracts and fees, warehousing information, storage information, etc. should be retained. For transactions involving the transfer of cargo right certificates, attention should be paid to the retention of cargo right certificates and storage information. In addition, quality inspection certificates of the goods should be requested, and suppliers should be required to provide information on their ownership of the goods. For services provided, attention should be paid to retaining relevant proof of services, such as textual information, chat records and consulting reports of consulting services; and contact information of vehicles and drivers of transportation services.

II. Financial internal control links: closer integration of finance and tax, the separation of "home" and "business" need to be calculated clearly

Point 5: Manage the enterprise funds, vigilant internal borrowing and current accounts

A is the major shareholder of enterprise A, the actual controller, always will be A enterprise is for their own private property, arbitrary withdrawal of enterprise funds, consumption are also reimbursed by the enterprise. In order to level the books, the financial can only frequent hanging shareholders borrowing, reimbursement, current. In a "double random" inspection, the tax authorities found this problem, requiring A enterprise to make up for the withholding of A personal tax, and impose a fine.

The enterprise is owned by the investor, but the money of the enterprise is not. According to the current regulations, the investor's use of enterprise funds for consumption, as well as the enterprise's borrowing for more than one year, must be regarded as the distribution of dividends and bonuses, and the enterprise withholds and pays the individual income tax on behalf of the investor. If the withholding agent should withhold but does not withhold, or should collect but does not collect the tax, the tax authorities will recover the tax from the taxpayer, and the withholding agent will be subject to a fine of more than 50% and less than three times of the tax that should be withheld but does not withhold, or should collect but does not collect. Therefore, to strengthen the financial authority and the courage to say "no".

Point 6: Manage the use of business funds, to eliminate the return of funds

Enterprise A is a wholesaler of prepared food, and its customers are small restaurants that don't want invoices. Therefore, the owner of enterprise A, A often let customers through WeChat, Alipay transfer to the personal account of A, when the enterprise needs funds, borrow from A, and then return to A. The tax authorities determined that Enterprise A was operating off the books and evading taxes, and imposed a fine.

There are two possibilities for the return of funds, both of which have a greater risk.1, the return of funds in the false billing, because the enterprise needs to go to the account in order to invoice, it will play money to the invoicing enterprise, and then the invoicing enterprise through the personal account to turn the money back to the formation of reflux.2, tax evasion of funds in the return of funds, i.e., the enterprise's public account and the controller, employees, such as the frequent exchanges in the private account, it is easy to suspect that it is the operation of the off-the-books tax evasion. In addition, investors frequent exchanges of funds, but also the suspicion of evasion of contributions. Therefore, the financial to strengthen the enterprise funds management, to avoid too close with the private account of the capital transactions.

Point 7: Strengthen the isolation of investor and enterprise funds

In order to isolate the business risk, enterprise A has set up a wholly-owned subsidiary, enterprise B. The risky business is carried out through enterprise B. However, in order to save costs, enterprise B has a wholly-owned subsidiary. However, in order to save costs, the financial and business of enterprise B are served by the employees of enterprise A. The financial transactions between the two companies are very confusing, and customers sometimes transfer money to enterprise A directly. Later, Enterprise B was suspected of accepting false invoices and was unable to pay the huge amount of VAT, and was on the verge of bankruptcy. The tax authorities considered that enterprises A and B constituted a commingling, and also issued a notice to enterprise A to pay tax.

Although a limited liability company can serve the function of isolating risks, there are limits to this isolation function. Shareholders who abuse their limited liability to cause losses to the debtor can penetrate the limited liability of the company and the shareholders are jointly and severally liable. Not only corporate shareholders, natural person shareholders may also face penetration. To avoid the phenomenon of mixing, the enterprise finance should strictly implement the financial system to ensure financial independence, improve the enterprise accounting books, and ensure the separation of property and personnel between the enterprise and its investors.

Point 8: Payroll and Employee Tax Withholding Compliance

Company A is going to give a bonus to the main technical backbone, but it needs them to provide a certain percentage of invoices and pay them under the name of reimbursement expenses.

Changing the name and the nature of the income may constitute tax evasion for the taxpayer, i.e. the employee; for the enterprise, it is an evasion of the withholding obligation and may face a fine of 50% to 3 times. With the inclusion of social insurance and other non-tax income into the scope of tax administration, enterprises should strictly abide by the provisions of the tax law to deal with the wages of employees.

Point 9: Strengthen the issuance, acceptance, certification of credit and management of invoices

Enterprise A was fined 1,000 RMB by the tax authorities for poorly storing invoices.

Enterprise B, a catering company, was penalized by the tax authority because most of its customers did not ask for invoices and there were cases of non-issuance of invoices and non-recording of income.

Under the background of tax control by invoices, invoices are very important tax information, and the tax authorities can grasp the basic situation of enterprises by verifying the receipt and issuance of invoices. For example, if the enterprise has serious deviation of input and output, it is impossible for input goods to produce output goods; the enterprise has too many input items and too few output items, and the inventory is huge. These anomalies will trigger the attention of the tax authorities, so as to carry out audits. Therefore, the financial department needs to strengthen the management of invoices, in qualitative terms:

1. for the acceptance of the invoice, retain the invoice and its related business information;

2. For the invoices issued, keep the bookkeeping union and related business information;

3. pay attention to the content of the invoice, unit, goods, quantity, amount, tax and the actual same;

4. for the sale of goods when the customer did not ask for an invoice, according to the unbilled income treatment, in order to avoid the risk of tax evasion. However, it must be noted that, according to the provisions of Article 20 of the Measures for the Administration of Invoices, "Units and individuals selling goods, providing services and engaging in other business activities, collecting money for external business operations, the payee shall issue invoices to the payer", then invoicing belongs to a mandatory legal obligation, and failure to fulfill it can be punished by less than 10,000 RMB fine.

Point 10: Avoiding Business Kickbacks and Corruption

Enterprise A, a pharmaceutical company, paid a kickback to a pharmaceutical representative in order for its drugs to be purchased by a hospital, which could not be accounted for and could only be accounted for and offset by methods such as allowing others to issue false invoices.

Commercial bribery and commercial kickbacks are common in the pharmaceutical and medical device industry. Gray expenditures, such as kickbacks, will result in high gross profits on the surface of the enterprise, but high taxes and low net profits. As the expenditure cannot be deducted through proper channels for EIT costs, enterprises will obtain false invoices to offset costs through illegal means, which is a very high risk of violating false invoicing and tax evasion at the same time. Enterprises should take care to avoid business kickbacks and corrupt practices in their operations.

III. Tax declaration: tax incentives should be utilized to the fullest, and tax risks should be investigated

Point 11: Reasonable application of tax preferences and strengthening of business training

Enterprise A is a software development enterprise. In 2022, the company's R&D expenses did not meet the standards for software development enterprises (i.e., the proportion of the enterprise's total sales (business) revenue was not less than 6%), but it enjoyed the software development enterprise income tax incentives and underpaid tax, which was recognized by the tax authorities as a "false tax declaration" behavior. The tax authorities recognized the act as "false tax declaration" and recovered the tax, late payment fee and imposed a fine.

In order to encourage economic development, the state has implemented a series of tax incentives. However, these policies have certain complicated conditions, and if the enterprise does not meet the policy criteria and applies the policy, it will face tax risks. Accordingly, enterprises should strengthen the training and learning of tax personnel, properly and accurately apply the tax incentives, and actively contact the tax authorities to communicate with them about the application of the relevant policies when necessary.

Point 12: Application of VAT Law to Avoid Common Risks

1. Non-payment of VAT on out-of-the-money expenses. The tax basis of VAT includes the full price and out-of-the-money expenses. Out-of-the-money expenses refer to the handling fees, subsidies, funds, fund-raising fees, return of profits, incentive fees, liquidated damages, late payment fees, interest on delayed payment, compensations, payments in lieu of payment, advances in lieu of payment, and other out-of-the-money expenses charged to the purchaser. The tax rate is calculated according to the tax rate of the goods or services sold.

2. Deemed sales are not taxed. If the occurrence of the act of deemed sales, the need for value-added tax according to the law, for no sales of deemed sales, the determination of sales should also be fair.

3. Mixed sales, part-time business and other behaviors have not been handled correctly.

Point 13: Enterprise income tax treatment to avoid common risks

1. Failure to recognize revenue in accordance with the accrual basis. For example, when the time of sale of goods or services does not coincide with the time of invoicing, revenue should be recognized in accordance with the date of sale of goods or services, not the date of invoicing.

2. Failure to amortize contract acquisition costs in accordance with the new accounting standards. Under the new accounting standard, contract acquisition cost is the incremental cost incurred by an enterprise to acquire a contract that is expected to be recovered and should be recognized as an asset. Incremental costs are costs that would not have been incurred if the enterprise had not obtained the contract, such as sales commissions. Contract acquisition costs should be amortized over the period of time over which revenue is recognized, depending on their relevance. However, if the amortization period of contract acquisition costs does not exceed one year, you can choose to recognize them in profit or loss when they are incurred.

3.The use of current accounts and intermediate accounts to delay revenue realization.

4.unfair transactions between related enterprises.

Point 14: Avoid common personal income tax risks for investors, employees and customers

Enterprise A, a real estate company, carried out the activity of giving away property management fees to old owners by bringing new owners; in order to accelerate the return of funds, it gave away gasoline cards (prepaid IC cards) to customers who paid the house payment in advance. The tax authorities considered that Enterprise A had not withheld and paid personal income tax for gifts to individuals other than its own organization in its business promotion activities and imposed a fine.

In practice, there are a number of regulations concerning the withholding and payment of individual income tax, mainly as follows: 1) Long-term loans of individual investors for more than one year should be regarded as distribution of dividends and bonuses for withholding and payment of individual income tax; 2) Commercial insurance purchased for the employees of the enterprise needs to be withheld and paid in accordance with the wages and salaries of the individual income tax; 3) Gifts given gratuitously by the enterprise for the promotion of the enterprise for the individuals outside the unit need to be withheld and paid in accordance with the incidental income of the individual income tax; 4) Gifts given to individuals outside the unit need to be withheld and paid in accordance with the incidental income of the individual income tax. Gifts given by an enterprise to an individual other than its own organization for promotional purposes need to be subject to individual income tax withholding and payment on behalf of the individual; 4. When an enterprise receives an equity interest transferred by an individual shareholder, it needs to withhold and pay individual income tax on behalf of the individual when it pays the price for the transfer of the equity interest.

IV. Compliance construction link: industry, finance and tax overall consideration, see the real chapter in the smallest place

Point 15: All employees should establish tax risk awareness and compliance culture.

The construction of tax compliance of an enterprise is a "long-lasting war", which cannot be accomplished overnight. Among them, we should focus on cultivating employees' awareness of tax compliance and compliance culture to comply with tax laws and regulations. Only in this way can the compliance system be put into practice, otherwise, the system may be hollowed out and idled. Enterprises should conduct more compliance training and implement the compliance system strictly and thoroughly.

Point 16: Senior management is responsible for tax compliance approval, moving the authority upward

The boss and senior management are responsible for the final decision and approval of tax compliance, and raising the authority level of tax compliance can effectively implement the system and avoid the situation that the finance department staff can't constrain and interfere with the business department. The current national standard "Compliance Management System Requirements and Guidelines for Use" (GB/T 35770-2022) also proposes that business leaders should play a good leadership role, establish and follow the principles of compliance governance, and promote compliance in all aspects. Since tax-related risks, especially tax-related crimes, are likely to implicate business leaders, strengthening approval and compliance construction is also an initiative to avoid the personal risks of business leaders.

Point 17: Introduce external forces to carry out timed risk screening

Enterprise tax health check refers to the fact that enterprises should regularly conduct self-assessment, self-supervision and self-correction of their tax compliance status in their daily business activities. In addition to self-checking and self-correction, enterprises should hire professional tax lawyers, tax accountants, accountants and other personnel to audit and check tax risks, and identify and prevent tax risks in advance for enterprise tax risk points.

Point 18: Reasonable choice of after-the-fact relief channels to control risks

Compliance risk can be divided into two categories in terms of its controllability, one is controllable risk and the other is uncontrollable risk. This article mainly introduces the compliance system construction for controllable tax compliance risks, but it should also be noted that there are some uncontrollable risks in practice. For example, the enterprise enjoys the tax concessions granted by the local government, but with the audit authorities to clean up the local violation of the policy, the relevant concessions are invalidated and the tax is to be pursued; Another example is that the upstream of the supplier escapes and loses contact, the supplier is characterized as a false opening, and the invoices issued by the supplier are characterized as abnormal vouchers, which leads to the enterprise to face the risk of the transfer of the inputs. These risks can not be controlled by the enterprise, once the outbreak, can only seek relief after the fact, control methods to reduce losses in a timely manner. At this point, professionals should be hired to access, assess the costs and benefits of relief, and choose the appropriate reconsideration, litigation or other relief channels to recover losses for the enterprise.