On December 30, 2021, the Ministry of Finance and the State Administration of Taxation (SAT) issued the Announcement on Improving VAT Policies on Comprehensive Utilization of Resources (No. 40 of 2021), which stipulates that renewable resources recycling enterprises can choose to apply the simplified tax method to calculate and pay VAT according to the 3% levy rate. The new policy has been implemented since March 1, 2022, and for more than a month, the implementation of the landing around the world is not the same, with the waste enterprises reflecting the majority of the problems, according to the in-depth understanding and observation of Huayi, the new policy has not yet completely brought the waste materials industry out of the dilemma.

Since 2017, with the concentrated efforts of tax authorities in the special rectification of the scrap material industry, the number of fictitious invoicing cases in the scrap material industry has surged. Companies and individuals involved in these cases are facing significant administrative and criminal risks. Based on recent cases handled by Hua Tax Agency in the scrap material industry, these cases have gradually extended to both ends of the supply chain, involving a wide range of entities. Individuals in different transaction segments, including individual sellers, recycling enterprises, and end-users, are often implicated. The tax-related criminal risks now cover various aspects of scrap material procurement and sales transactions. The concentrated outbreak of fictitious invoicing cases imposes stringent requirements on legal defense.This article, drawing on an understanding of the scrap material industry and knowledge of tax and criminal laws, along with insights gained from numerous fictitious invoicing cases handled by Hua Tax Agency, analyzes business models, elements constituting fictitious crimes, case facts, and evidence. Based on this analysis, the article puts forward six key points for a defense of innocence from the perspectives of conviction and sentencing. These points are intended for reference by tax professionals and business personnel.

In recent years, with the launch of the "Crackdown on Fraud and Forgery" special campaign by four ministries, criminal cases related to false invoicing in the scrap material industry have continued to surge. The number of cases is on the rise, and heavy sentences are frequently applied. According to the search results, in 2020, a total of 90 cases of enterprises engaging in harmful tax-related crimes were publicly disclosed on the China Judgment Online platform. Among them, cases involving the crime of falsely issuing value-added tax special invoices accounted for the overwhelming majority, reaching 87 cases. In these 90 cases, there were 66 cases in the first-instance procedure. Among them, 23 cases resulted in sentences of more than ten years of imprisonment, and one case even received a life sentence, with a heavy sentence application rate exceeding 36%. Cases where probation was applied amounted to 19, with a probation application rate of less than 29%. Constrained by the specific nature of the scrap material industry, the inability of individual suppliers at the source to issue value-added tax special invoices has become a significant factor hindering the development of the industry. This issue has led to a considerable number of related practices, such as affiliation and proxy invoicing. In practice, many defendants who are still deemed to have committed the crime of false invoicing and are subject to heavy sentences after the first and second-instance procedures raise objections to the judgment. Initiating an appeal becomes an important way for these defendants to safeguard their legal rights. In this article, lawyers from Hua Tax Law Firm, drawing on their practical experience in representing cases related to false invoicing in the scrap material industry, analyze key issues and practical points to consider during the appeal process, providing reference for relevant enterprises and individuals.

From the perspective of policy context, there has not been significant change in the operating model of the scrap material industry, and the consistent practice of granting value-added tax (VAT) preferences reflects the country's policy orientation towards resource recycling. However, since the cancellation of the policy of VAT prepayment and refund for the scrap material industry in 2000, and the further cancellation of the VAT exemption for the sale of scrap materials by recycling units in 2008, scrap material recycling enterprises have faced the dilemma of lacking input invoices and bearing a heavy burden of VAT, with difficulty obtaining pre-tax deduction vouchers for corporate income tax.Since 2017, there have been successive outbreaks of fraudulent cases involving scrap material recycling enterprises in various regions of the country. The cases involve numerous upstream and downstream companies, and the amounts involved are enormous. Once the crime of issuing fraudulent VAT special invoices is established, the companies and individuals involved will face serious criminal liability. As a result, in order to avoid the potential risk of issuing fraudulent invoices, many scrap material recycling enterprises have chosen to forgo obtaining input invoices and fully pay the VAT on the sales link, opting instead to use self-made vouchers for cost deduction.Recently, tax authorities in some regions have begun to investigate the tax situation of scrap material recycling enterprises, with particular attention to the issue of pre-tax deduction vouchers for corporate income tax. In this issue, the author combines multiple relevant consultations to analyze the issue of pre-tax deduction vouchers for scrap material recycling enterprises, with the aim of providing recommendations for the scrap material recycling business.

As most production-oriented enterprises do not have the conditions for waste disposal in accordance with the standard, they have been using the "entrusted disposal" method to deal with the lack of mandatory provisions of the law in the era of "sewage charges", but since the official implementation of the Environmental Protection Tax Law in 2018, the tax authorities have issued a number of large environmental tax fines against such production-oriented enterprises. However, since the official implementation of the Environmental Protection Tax Law in 2018, the tax authorities have issued a number of large environmental tax fines for such production-oriented enterprises, triggering heated debates, but also attracting the attention of enterprises to environmental tax compliance. On the one hand, due to the environmental protection tax is mostly the leveling of sewage charges, its levy object, scope, tax standard, tax basis and did not make large adjustments, enterprises in the fee to tax will not obviously feel the increase in the tax burden, and therefore did not pay attention to. But on the other hand, due to the "fee to tax" after the enterprise should bear the legal responsibility is also a trend of aggravation, before the sewage charging system is not enough rigidity of the enterprise will face a huge risk of violation of the law. Starting from two practical cases, the author systematically analyzes the compliance of "entrusted disposal" of wastes by analyzing the focus of disputes between tax enterprises and the two sides for the benefit of readers.

On February 1, 2019, the criminal case of a waste materials recycling business enterprise, represented by Huashui, for allegedly falsely issuing VAT invoices (with price and tax totaling tens of millions of yuan) was reviewed and concluded by the competent People's Procuratorate. In the end, the public prosecution authorities made and delivered the Decision of Not Prosecuting to the enterprise and four employees (all defendants), and the enterprise and the natural persons involved in the case were exempted from criminal liability. After nearly one year of defense work by Huatax lawyers, the case was concluded with the result of non-prosecution by the prosecutor's office, which was highly recognized by the client, and coincided with the eve of the Chinese New Year, and the people involved in the case were able to be reunited with their family members, which was also a great relief to us. Due to the impact of tax policy and industrial characteristics and other reasons, the waste materials recycling business industry has been the hardest hit by the case of false opening, the tax risk is high. This paper summarizes and analyzes the relevant circumstances and core legal issues of this case, with a view to providing useful reference for the judicial handling of the suspected cases of false opening of relevant enterprises in the future.

The National Audit Office released the Audit Work Report on the Implementation of the Central Budget and Other Financial Income and Expenditure in 2020 on June 7, 2021, which pointed out that 15 provinces and municipalities returned 23.873 billion yuan of taxes in the name of financial incentives and other names, and most of the return ratio was more than 90% of the locally shared income. And put forward, some grassroots financial expenditure pressure increases, to urgently clean up and regulate the illegal return of tax behavior in some places. In order to encourage the development of the circular economy, a number of places on the waste materials recycling enterprises have introduced a financial return incentive policy, the release of the work report, will further exacerbate the risk of invoice compliance of waste materials recycling business enterprises. In judicial practice, some courts have denied the recycling business model, and the amount of financial rebates obtained by the enterprise is recognized as the loss of national tax and characterized as false invoicing. Through a case analysis, Huatax lawyers pointed out that fiscal refund cannot be equated with tax loss, and discussed how the authenticity of goods transaction and tax loss involved in the crime of false VAT invoice should be recognized.

Recently, Hwuason Law Firm has received a number of non-ferrous metal and scrap steel enterprises' consultation on the case of variable invoice and false invoicing. Combined with the frequent cases of non-ferrous metal industry's gold invoices and variable invoices in recent years, the issue of variable invoices and false invoicing in non-ferrous metal and renewable resources industry has become the focus of attention of the tax authorities. Due to the expensive value of gold itself, strong value preservation, by consumers collection and investment favorite, consumers do not ask for invoices of behavior led to the gold invoice "surplus votes" exist; at the same time due to the special tax policy of gold and gold ticket huge profits trend, emerged a number of gold ticket false opening gang; and due to the gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics. And because gold is easy to melt with other non-ferrous metals, gold invoices are mostly combined with non-ferrous metal industry, and extended to renewable resources metal recycling enterprises, which makes the tax risk of enterprises in the business chain surge.