In last week's article, I made an inventory of the eight major triggers for the outbreak of tax-related risks on Internet tax platforms. However, the so-called "fuse" belongs to the "external causes", the real hidden tax-related risks, or the current five types of business models of the Internet taxation platform. As we know, the Internet tax platform relies on the network, the business scope for all parts of the country, the number of customers, if the business compliance is not in place, the risk of tax evasion and false opening is more likely to erupt. Therefore, this paper analyzes the five risky business models of Internet taxation platforms and puts forward corresponding response ideas for the benefit of readers.

I. The risk of tax violations explodes! Many places audit internet tax platforms

(I) Jiangsu Suzhou investigated and dealt with a case of tax evasion by a network technology company setting up an individual household

Recently, according to the official website of Jiangsu Provincial Taxation Bureau, the public announcement disclosed that an Internet technology company in Suzhou, Jiangsu Province, through the establishment of an individual industrial and commercial household, "to solve the problem of part of the cost of no invoice to be listed, and planning to use the difference between the tax burden to pay less income tax," are characterized as tax evasion and imposed a fine of 50%. It can be seen that the company implemented two tax evasion behaviors to reduce the company's tax burden through the individual entrepreneurs, one is to let the individual households to falsely open the ordinary VAT invoices, in order to violate the pre-tax expenses; the second is to transfer part of the company's business to the individual households, so that the individual households to enjoy the conditions of income tax approved levy, in order to circumvent the company's 25% of the corporate income tax. It was eventually characterized as tax evasion by the tax bureau.

(II) Yancheng, Jiangsu Province, requested an enterprise to provide materials such as "tax incentive return agreement".

Recently, according to the service announcement of the Third Inspection Bureau of Yancheng Taxation Bureau of Jiangsu Province, the Third Inspection Bureau requested a company to provide "copies of tax incentive return agreements and related settlement information signed between your organization and the enterprises (or individuals) being attracted to investment, and other tax-related information", and it is obvious that the company belongs to the platform for attracting investment enterprises that were able to provide financial rebates in the past in certain places. Tax policy of investment platform enterprises, and its tax audit, there may be the use of financial rebates to implement false invoicing and other violations.

(III) Summary: With the tightening of tax regulation, the risk of Internet fiscal platform has surged
The original intention of the Internet fiscal and tax platform is to utilize the network channel to expand the customer base of tax-related services and better deliver the information on tax incentives. However, in practice, some Internet tax platforms have assisted customers in tax evasion, or platforms for customers in the tax pits registered enterprises into the risk of false opening. As the state strengthens the policy of cleaning up local financial rebates and applies in principle the checking account levy to individual households, the possibility of the outbreak of risks related to the Internet finance and tax platform is also gradually going up. Accordingly, the author summarizes the higher business model of the tax-related business mode of the current Internet taxation platform and reveals the risks as follows.

II. Changing Means to Reduce Tax Burden, Five Business Models Hidden Tax-Related Risks

(I) Labor Income or Business Income? Risk of tax evasion by changing the nature of income
Converting the nature of income refers to the use of individual business households to convert the comprehensive income of a natural person, such as salary income and labor income, into business income to apply a low tax rate or approved tax rate. However, the State Administration of Taxation (SAT) has made it clear through publicized audit cases that "converting" labor income to business income constitutes tax evasion, and some localities have begun to investigate and deal with such conversion of income. At the beginning of 2012, there were news reports that a certain place in Henan had investigated and dealt with an Internet-based flexible labor platform on the grounds that the platform had levied personal income tax on behalf of flexibly employed persons on the basis of "income from production and business", which was an error in the application of the tax rate, and that it should be levied on behalf of flexibly employed persons on the basis of "income from labor remuneration" and in accordance with the "income from labor services" principle. It should be levied according to "income from remuneration for labor services", and liquidated damages were levied on the flexible employment platform in accordance with the entrusted levy agreement. In practice, Internet tax platforms also save tax for high-income people by registering them as self-employed.

According to the current Individual Income Tax Law and its implementing regulations, the four comprehensive incomes can be subject to a maximum progressive tax rate of 45%, and only statutory special deductions can be deducted before tax. However, business income is subject to a maximum progressive tax rate of 35% and pre-tax deductions can be made for costs, expenses and losses incurred in the course of business. What makes the tax burden rate of business income even lower is that because most self-employed households are family-run, with mixed properties and confusing accounts, some places have set up preferential policies for self-employed business households to enjoy approved income tax or even flat-rate levy under certain conditions, and the value-added tax (VAT) rate of 3% for small-scale taxpayers has resulted in an abnormally low comprehensive tax burden rate.

There is a risk of being recognized as helping tax evasion as Internet tax platforms get hold of these places nationwide that can provide approved levy policy places for self-employed persons and sole proprietorships and help high-income and high-net-worth people to register their self-employed persons and sole proprietorships therein in order to enjoy a lower tax burden rate.

(II) Splitting personal income and separately applying the approved policy for individual business enterprises hide the risk of tax evasion
Splitting income is also a tax evasion behavior clearly mentioned by the State Administration of Taxation in a number of cases of tax evasion in the network entertainment industry. This behavior is closely related to the nature of the conversion income above. Namely, because there are certain conditions for the application of enterprise income tax and value-added tax concessions for individual business households, for example, the requirement in a certain place is that the annual business turnover is less than 3 million yuan in order to enjoy the policy of approved levy. In this way, for certain stars whose incomes are often in the tens of millions of dollars, this amount is unable to carry a high amount of income, and must be converted to a checking levy, applying a progressive tax rate of up to 30%. Therefore, some Internet finance and taxation platforms use their information advantages to open and control dozens or even tens of individual business households in multiple places and through the identity documents of many people, so as to split a huge amount of income into dozens of pens, and enjoy the approved levy policy respectively. Obviously, such behavior in the process of carrying out, there is bound to be false business, yin and yang contract situation, thus constituting tax evasion. And the Internet financial and tax platform becomes the helper criminal of tax evasion.

(III) registered sole proprietorship enterprises, false declaration, rapid cancellation, violent "burden reduction" vulnerable to audit
If splitting income and converting the nature of income are still considered "technical work", then the means of some Internet tax platforms appear to be a bit rough. According to what we learned a few days ago, there are some Internet tax platforms for high-income individuals to start a sole proprietorship enterprise, and the income is collected through the sole proprietorship, but the tax declaration is not declared according to the facts, but fills in a number indiscriminately, and the sole proprietorship will be canceled immediately after the declaration is completed. Need to be clear, individual business and natural persons in the law has the consistency of the subject, that is, individual cancellation can not play a penetration of the function of pursuing the natural person; individual to a certain extent with the role of isolation of responsibility, but according to the current "Company Law" Article 63 of the provisions of the person in charge of the individual to prove that the assets of the natural person and the individual's assets are not mixed up with the burden of proof, if the proof can not be, still It can be easily penetrated, and if the responsibility for tax evasion is pursued, both the enterprise and its responsible person can be criminalized. Therefore, the risk of this type of behavior is huge.

The above three modes are only risks of tax evasion, while the following modes will lead to more serious risks of false opening.

(IV) The use of "tax depressions" on behalf of the enterprise, the risk of false opening of the customer is easy to transmit
In the past, some places in order to attract investment, to attract investors in the local business, will set up certain preferential policies, the formation of the so-called "tax depression". In these preferential policies, the biggest problem is the so-called financial return, that is, the enterprise to pay the value-added tax, the local share of the part of all or part of the return to reduce the tax burden on enterprises. With the State Council's repeated requests to cancel similar policies in recent years, it is now rare.

Some Internet finance and tax platforms have grasped the local financial rebate policy, so they put up the banner of lowering the tax burden for enterprises on the Internet, promising that they can help customers register and start businesses in the relevant parks. However, since these parks are too far away from the actual business places of the clients, and at the same time, the platforms also want to obtain service fees from the clients on a continuous basis, so the Internet finance and tax platforms also control the enterprises on behalf of the clients, act as the bookkeepers, receive and pay the funds, and issue and receive the invoices according to the business information passed on by the clients.

At this time, if the customer makes use of the Internet tax platform and the local financial rebate policy, by providing false business information, the enterprise controlled by the platform will falsely issue VAT invoices to the outside world, then once the risk of false invoicing breaks out, the tax and public security investigations will be investigated and dealt with by the platform, and it will be easy to consider that the platform also participates in the false invoicing behavior because of the fact that the platform has control over the invoicing enterprise's funds, water flow, tax-control disk and Internet banking U shield, and thus it will be an accomplice to the false invoicing. (v) Offsetting of false invoices.

(V) Invoicing to offset inputs and enterprise costs, the invoicing party and the invoiced party have criminal risks.
Some Internet finance and tax platforms will utilize their enterprises or individual businessmen registered in tax depressions to issue false invoices for enterprises. Some platforms will instruct enterprises to allow their employees or other natural persons to issue false invoices on behalf of enterprises to offset the costs, and some will even issue special VAT invoices falsely. Whether it is a special invoice or a general invoice, the invoicing party and the recipient are at risk of being held criminally liable. Recently, a court in Shanghai sentenced a case of using natural persons to issue false invoices to reduce the tax burden of enterprises, and the person in charge of the invoiced party was held criminally liable.

In short, the above five risky business models are common violations of the Internet taxation platform, and some models are not limited to the Internet taxation platform, similar to the flexible labor platform and other Internet platform enterprises will also face, with a high risk of tax evasion, false invoicing, and even trigger criminal liability, the platform enterprise should be vigilant. In view of the possible risk of tax evasion and false opening, the author summarizes the relevant experience and puts forward some countermeasures.

III. Response to the Risk of Suspected Tax Evasion and False Opening on Internet Tax Platforms

(I) The establishment of self-employed and individual households has legitimacy and reasonableness, and should not be characterized as tax evasion.
For Internet taxation platforms and even flexible labor platforms and network freight platforms, they are currently facing a difficult problem in the application of the law, i.e., what is the income from production and operation and what is the income from labor services? In particular, after registering an individual business on behalf of a natural person in accordance with the law, the platform withholds or collects personal tax on behalf of the natural person in accordance with the "income from production and operation", but still faces the possibility of being recognized as applying the law incorrectly or converting the nature of income. The source of this problem lies in the reply of the State Administration of Taxation to Recommendation No. 8765 of the Third Session of the 13th National People's Congress, which states: "Whether the income obtained by flexible workers is taxed as income from business operation should be determined on the basis of the economic substance of the taxpayer's provision of labor services or business operation on the Internet platform, rather than simply looking at the display platform on which the individual's labor is based, or it will easily lead to a situation where individuals engaging in the same nature of labor will be subject to the same income as that from production. easily lead to different tax liabilities for individuals engaged in labor of the same nature, which is not in line with the principle of tax fairness." Although the reply also considers that, in principle, those who have registered an individual business should be counted as business income, but the judgment based on the principle of "economic substance" is still puzzling to localities and platform enterprises. In practice, there are indeed places that believe that although they have registered an individual business based on "economic substance", the nature of the service belongs to labor service rather than business, and should be recognized as remuneration for labor service.

At present, the Implementing Regulations of the Individual Income Tax Law adopts an enumerative approach, but this enumeration is not only incomplete, but also overlaps between labor services and business. According to Article 6 of the Regulations for the Implementation of the Individual Income Tax Law, labor services are included:

Production and business also include "schooling, medical care, consulting and other paid service activities":

Therefore, it is still difficult to distinguish between labor services and production and business activities from the Implementation Regulations.

According to SAT's regulations, services with strong personal attachment are generally recognized as labor services. For example, the Interim Measures for the Administration of Collection of Personal Income Tax in the Advertising Market stipulates that "Income derived by taxpayers from providing their name and image in the process of designing, producing and publishing advertisements shall be calculated and taxed under the item of income from remuneration for labor services." Emphasis is placed on the name and image of the individual. However, "Income derived from providing other labor services in the process of advertising design, production, and distribution" shall be taxed in accordance with the corresponding tax item according to its nature. The Interim Measures for the Administration of Collection of Individual Income Tax in the Performance Market stipulates that: "Remuneration obtained by actors and actresses for participation in performances organized by non-service units shall be income from remuneration for services" and "Remuneration obtained by actors and actresses for participation in performances organized by service units shall be income from wages and salaries". It is also clear that the only two types of remuneration for actors and actresses are labor and salary. Similarly, in the case of tax evasion by the anchor, the anchor's appearance, publicity, network promotion and other behaviors because of the strong personal dependence, which may be recognized as the reason for labor services.

However, on the contrary, for medical services, according to the Circular of the State Administration of Taxation on the Collection of Individual Income Tax on Individuals Engaged in Medical Service Activities (Guo Shui Fa [1997] No. 178), they are always taxed according to the income from business, including "Individuals who are engaged in medical service activities continuously on their own without the approval of the governmental departments concerned, regardless of whether or not there is any place of business, and whose income is related to the medical service activities, shall be taxed as labor services. The income related to medical service activities shall be subject to individual income tax in accordance with the taxable items of 'production and business income of individual industrial and commercial households'." It can be seen that such income can be judged as business income if it can be "continuously engaged on its own" and has little to do with the taxpayer's image, name, etc. Accordingly, we believe that the term "business income" means "income from production and operation".

Accordingly, we are of the view that "conversion of income" should be applied with caution. Judged according to the principle of economic substance, it is only applicable to those labor activities with a high degree of personal dependence. In other cases, if a high-income individual agrees to register as an individual businessman or set up a sole proprietorship enterprise with the assistance of an Internet-based tax platform, he or she should be recognized as having earned business income, and should not be held liable for the so-called "conversion of the nature of income". Accordingly, the platform does not belong to help others evade taxes.

(II) When the risk of tax evasion such as income splitting and false declaration breaks out, the first thing to do is to block the criminal risk.
If the Internet tax platform is recognized by the tax as tax evasion and subject to administrative penalties by the client due to the implementation of acts such as splitting income and false declaration, the Internet tax platform may constitute an administrative violation of providing convenience for taxpayers resulting in unpaid and underpaid taxes as stipulated in Article 93 of the Implementation Rules of the Tax Collection and Management Law, and may be punished with a fine of up to one times of the amount of the unpaid and underpaid taxes.

At this time, if the client, as a taxpayer, fails to pay the full amount of tax, late fees and fines, which may constitute the crime of tax evasion, the platform may be punished as an aiding and abetting offender of the crime of tax evasion. Therefore, the platform should urge and assist the customer to make up the tax, late payment and pay the administrative fine in order to circumvent the criminal liability.

(III) The return of local finance is not a tax loss and should not be recognized as a false invoicing crime

At present, the crime of false VAT invoicing needs to cause the loss of national tax money, which has been confirmed by the Supreme People's Court with typical cases and the approval of the Research Office, and gradually recognized by people. However, in practice, there are some cases in which the return of local finance is recognized as loss of tax money. The author believes that the financial return has the legitimacy, does not belong to the illegal income, and the loss of national tax has no direct relationship, can not be recognized as such. On the one hand, our country in the past is recognized, tolerate the local government financial rebates, incentives and subsidies policy, if the local violation of the administrative agreement, the enterprise can also be sued for the local fulfillment of the legitimacy; on the other hand, the financial funds and taxes have the nature of the difference between, since the "two lines of income and expenditure", for the local government through the National People's Congress budget approval of financial funds, local independent use and undoubtedly the loss of taxes. Financial funds, local autonomous use and no doubt, the two lines should not be confused.

(IV) Distinguish the responsibility of false invoicing between customers and platforms through subjective elements to avoid risk transfer.

The crime of false VAT invoicing is an intentional crime, and according to the principle of subject-object consistency, the perpetrator needs to have at least the subjective purpose of cheating against the state tax and making profit from it, and know the behavior and consequences of false invoicing. In some modes of the Internet tax platform, the platform controls the customer's enterprise, and the customer guides the invoicing behavior of the platform. In practice, there are behaviors in which the platform directly uses the enterprise under its control to issue false invoices to the outside world, thus implicating the customer; there are also behaviors in which the customer provides false information to deceive the platform and issue false invoices to the outside world. At such time, if the deceived party can prove that it has fulfilled the formal audit obligation, retained the documents and drafts of the audit, and proved that it has no subjective intent to cheat tax, and is unaware of the behavior of the other party, then it may be convicted from the subjective elements.

IV. Summary: The Road to Compliance for Internet Tax Platforms

For the Internet tax platform, at present, with the local cleanup of the financial rebate policy, individual business households to spread the checking of accounts, the space for enterprises to carry out tax saving has been very narrow, if you want to develop for a long time, you must adhere to the compliance of the business. On the one hand, it is necessary to put an end to illegal business, strengthen the construction of compliance, isolate the risk of customers, and build a perfect system from the bottom of the business. On the other hand, relying on the Internet to explore legal and compliant tax-related services, such as tax consulting and declaring tax incentives on behalf of enterprises, to avoid tax-related risks.