Editor's Note: In recent years, as the country continues to promote structural reform of the supply side of logistics, and promote the logistics and transportation industry "cost reduction and efficiency", the logistics and transportation industry has emerged as a new mode of transportation, such as car-free transport and network freight platform, which relies on the mobile Internet and other technologies to build a logistics information platform to effectively improve the efficiency of the transportation organization, and has been welcomed by the market. The market is welcome. However, at the same time, some network freight platform enterprises deviated from the business track, using the tax policy given by the state, false purchase of refined oil, ETC invoices to offset the input wantonly to the downstream enterprises of false invoicing, the main body involved in the case was ultimately convicted and sentenced by the court for the crime of false opening of VAT invoices or the crime of illegal sale of special invoices. As the dust settles on the suspected false invoicing case of the network platform enterprise, what kind of tax administrative risks will the related invoiced enterprises face and how should they respond? This article is intended to reveal and provide a brief response idea for the invoiced enterprises.

I.A number of network freight transportation platforms were sentenced, implicating a large number of enterprises subject to the ticket, involving a huge amount of money

i.Shen's provincial heart false opening case implicates more than 2,700 invoiced enterprises, involving more than 9.1 billion yuan

According to the Criminal Judgment (2023) , the court ascertained that at the end of May 2019, Shen's Provincial Heart added the function of supplementing the waybill in the pre-developed network freight vehicle and cargo matching system, and its salesmen marketed invoices to the invoiced enterprises, such as logistics and construction, which lacked input invoices, and supplemented the information on the business that the invoiced enterprises had already entrusted to the transportation of the social vehicles to be completed by themselves with the information on the Shen's Provincial Heart's network platform, and invoiced the invoiced enterprises. From June 2019 to April 2021, Shen's Provincial Heart issued invoices to more than 2,700 enterprises involving 9.1 billion yuan. Finally, the court ruled that the subject involved in Shen's provincial heart is guilty of illegally selling VAT invoices, ranging from one year and six months to ten years of imprisonment.

ii.Sichuan a ETA false opening case implicating more than 1,500 yuan of recipient enterprises, involving more than 16 billion yuan

According to a case announced by the Sichuan Public Security Bureau in May 2022, a criminal gang, relying on the network freight transportation platform of "Certain Easy-to-Use" and taking advantage of the tax return incentive policy of the local government, had falsely issued VAT invoices to the public, involving an amount of more than RMB 16 billion and affecting 1,565 downstream enterprises. It is reported that this case was also characterized as the crime of illegally selling VAT invoices, and the two main offenders were sentenced to more than 10 years of imprisonment.

iii.Henan Kaifeng logistics company false opening case implicates more than 550 ticketed enterprises, involving more than 2.7 billion yuan

According to the article "Exploration of Practical Issues Involving Fraudulent VAT Special Invoice Issues of Shell Companies" written by the People's Procuratorate of Jiefang District, Jiaozuo City, Henan Province, He was responsible for the establishment of a logistics company and a coal company to carry out tax fraud under the guise of carrying out the business of network transportation business and the business of buying and selling coal, and the group had falsely invoiced value added tax special invoices to a total of 556 external companies, with a total amount of more than 2.7 billion yuan involved in the case. The court finally ruled that the relevant subjects involved in the case had committed the crime of falsely issuing VAT invoices and were sentenced to imprisonment ranging from one to fourteen years.

iv.Case summaries

The first three cases reflect the new business model of car-free transport, network freight platforms have been utilized by people with the intention to deviate from the original intention of the national development of network freight, in the name of operating network freight, the practice of criminal invoicing, the main body involved in the case of the company is not a car-free transport platform, network freight platform and invoicing platform. For the invoicing party of vehicle-less transportation and network freight platform, once it is found out by the tax authorities and judicial authorities that it has not engaged in network freight operation and assumed the duties and obligations of network freight operation in accordance with the state regulations, and that it has not integrated the capacity resources, actually carried out real-time monitoring of the whole process of vehicle transportation and assumed the responsibility of the carrier, it will face the criminal charge of the crime of false invoicing of VAT or the crime of illegal sale of VAT invoices. The criminal risk of the relevant real controller being sentenced to more than ten years' imprisonment is extremely high. For the implicated invoiced enterprises, the tax-related risks they face will vary according to their actual situation.

II.There are differences in the tax consequences faced by the invoiced companies after the online freight platforms are convicted of false or illegal sales

According to the cases of practical tax treatment, the invoiced enterprises implicated by the network freight transportation platform are recognized as bona fide acquisition, not good or bad acquisition of invoices, tax evasion, and suspected of false invoicing criminal transfer of the situation exists, specifically:

i.Constitutes a bona fide acquisition, and only requires the recipient enterprise to pay the VAT, without adding late payment fees

According to the Circular of the State Administration of Taxation on the Problems of Handling VAT Special Invoice Obtained by Taxpayers in Good Faith (GuoShuiFa [2000] No. 187), if there is a real transportation transaction between the invoiced enterprise and the network freight platform; the network freight platform issued special invoice of the province where it is located; and all the contents of the special invoice such as name of the seller, seal, number of services, amount and tax are consistent with the actual situation; at the same time, the evidence in the case lacks evidence of the subjective aspect of the invoiced enterprise obtaining the invoice in bad faith. At the same time, the evidence in the case lacked evidence of the subjective aspect of the invoiceee enterprise obtaining the invoice in bad faith, the tax authority would determine that the invoiceee enterprise constituted a bona fide acquisition, and require the invoiceee enterprise to transfer the input VAT amount, and at the same time, in accordance with the "Approval Reply of the State Administration of Taxation on the Issues of Adding Late Payment Fee to Taxpayers' Deducted Tax for Acquiring Fraudulently-Opened VAT Special Invoices in Good Faith" (GuoShuiHuHan [2007] No. 1240), no late payment fee would be charged. The taxpayer shall not be charged late payment fees. For example, in the case of a logistics company obtaining false invoices from a network freight transportation platform, the competent tax authority of a logistics company initiated the case filing procedure for a logistics company after receiving the Notice of Confirmed False Invoicing and Letter of Concurrence on Tax Violation Cases sent by the competent tax authority of the network freight transportation platform and, after inspection, considered that the logistics company had truly accepted the transportation services of the network freight transportation platform and only transferred out the input tax, and did not add late payment charges. Late payment fees were not added, and the company was allowed to rely on the materials of real expenses as the pre-tax deduction vouchers for enterprise income tax.

ii.Constitutes the acquisition of non-compliant invoices, requiring the recipient enterprise to transfer input tax and pay late fees without adjusting enterprise income tax

According to the provisions of the Announcement of the State Administration of Taxation on the Issues of Taxpayers' Levy and Repayment of Taxes on Fraudulently Issued VAT Special Invoice (Announcement of the State Administration of Taxation No. 33 of 2012), although the invoiced enterprise does not constitute a bona fide acquisition of VAT special invoices, the tax authorities are unable to prove that the invoiced enterprise maliciously obtains the invoices issued by the network freight transportation platform for offsetting the input tax amount, and that it is subjectively intentional in falsely stating the cost of tax evasion, and the tax authorities will Require the invoiced enterprise to make VAT input transfer and impose late payment fees. For example, in the case of AT&T obtaining false invoices from logistics enterprises, since the evidence in the case could prove that AT&T had really purchased transportation services to transport the flame retardants it produced and sold to the designated place of the customers, and the tax authorities could not prove that AT&T had obtained false invoices from the logistics enterprises in bad faith, the tax authorities finally required AT&T to make transfer of input VAT and payment of late payment fees only.

iii.Qualify the acquisition of false invoices in bad faith as tax evasion, and require the recipient enterprise to transfer input tax, pay back enterprise income tax, pay late fees and fines.

According to the provisions of the Circular of the State Administration of Taxation on Issues Concerning the Treatment of Taxpayers Obtaining Fraudulently Issued Special VAT Invoices (Guo Shui Fa [1997] No. 134) and the Supplementary Circular of the Circular of the State Administration of Taxation on Issues Concerning the Treatment of Taxpayers Obtaining Fraudulently Issued Special VAT Invoices (Guo Shui Fa [2000] No. 182), an enterprise that is subject to the receipt of the invoice obtained by the third party and declares the tax deduction to the tax authorities constitutes tax evasion. tax authorities to declare tax deduction constitutes tax evasion. Accordingly, the tax authorities will require the invoiced enterprise to transfer the input tax amount, pay late payment fees and impose a fine of 0.5-5 times. In practice, because individual drivers can not provide transportation invoices for enterprises receiving transportation services, the relevant enterprises will, in order to obtain invoices to offset input tax, provide information such as vehicle information and driver contact information of the completed transportation to the network freight transportation platform in order to obtain the VAT invoices issued by it. Returning to the aforementioned Shen's Save the Heart case, the downstream enterprises implicated in the Shen's Save the Heart case face such tax risks. For example, in the case of a Guangdong logistics company obtaining false invoices from Shen's Provincial Heart, the logistics company commissioned social vehicles to transport for its customers, and because it was unable to obtain invoices issued by the social vehicles, it obtained invoices issued by Shen's Provincial Heart through the payment of a handling fee, and the competent tax authorities determined that the logistics company constituted tax evasion and required it to pay back the value-added tax, late payment fees and penalties.

In addition, if the invoiced enterprise is unable to reissue or exchange the invoice or provide the necessary information that can confirm the authenticity of the transportation expenditure, the tax authorities will also require the invoiced enterprise to make adjustments to the EIT, pay back the EIT, or even define the underpayment of EIT as tax evasion and impose a fine.

iv.Constitutes maliciously obtaining false invoices and is referred to the public security organs

In practice, there is also after the tax authorities of the invoiced enterprise after the case check, found that the invoiced enterprise through the fictitious business contract, the public account of the false payment of transportation costs maliciously obtain network freight platform invoices issued by the public security organs, the tax authorities referred to the public security organs. For example, in the case of a coal enterprise in Inner Mongolia obtaining false invoices from the network freight platform, the tax authorities jointly with the public security organs found that the actual controller of a coal enterprise proposed to the operator of the network freight platform to pay the "ticket point", and the two sides did the return of funds to issue invoices. Therefore, the tax authorities did not characterize a coal enterprise as a tax evader, but found that a coal enterprise had allowed others to issue invoices for itself that were inconsistent with its actual operations, and transferred them to the public security authorities for processing, in accordance with the provisions of the Measures for the Administration of Invoices.

It should be pointed out that in the case of the transfers of the invoiced enterprises to the public security organs, they may face criminal charges for the crime of false VAT invoices or the crime of illegal purchase of VAT invoices, which will not be repeated in this article.

III.How can the invoiced enterprises of network freight transportation platforms cope with the tax administrative risks that have erupted?

As China adopts the tax collection and management method of "controlling tax with invoices", invoices are given important legal significance, not only as a proof of VAT deduction, but also as a proof of cost deduction for enterprise income tax. As we can see from the foregoing, if the network freight transportation platform is in trouble, the relevant invoiced enterprises will have to bear the legal responsibility of paying back taxes, late payment fees and fines at the tax level only. Therefore, the relevant invoiced enterprises should, at the first time of receiving the notification of filing and inspection issued by the competent tax authorities, organize the business and financial information involved in the case, hire tax professionals to intervene, restore the original business, combine the principles of the tax law and relevant regulations, and set up targets at different levels to maximize the avoidance of economic losses and the prevention of criminal risks.

i.Compilation of operational and financial information that can prove the authenticity of transportation operations

In terms of business information, the relevant business person in charge of the invoiced enterprise should be as soon as possible to sort out the business materials with the network freight platform, sort out with the network freight platform related personnel to negotiate the information, signed the transport contract, lb list, check the catty list and other materials, if necessary, sort out with the purchase and sale of transported goods contract, in order to support the authenticity of the transport business. In terms of financial information, the person in charge of finance should sort out the original documents, bookkeeping vouchers and relevant transportation invoices of the transactions involved in the case pen by pen, which can restore the transactions with the network freight platform to a certain extent, in order to prove the authenticity of the transactions between the recipient enterprise and the network freight platform. It should be made clear that if there is an obvious fund return in the transportation transaction in question, the invoiced enterprise should provide further evidence that the fund return in question is not a fund return to avoid being characterized by the tax authorities as tax evasion.

ii. Engaging tax professionals and actively communicating with tax authorities

If the relevant invoiced enterprise is unable to cope with the inspection of the tax authorities by itself, it does not know how to restore the facts of the case, sort out the evidence and apply the law accurately. Consideration may be given to hiring tax professionals to intervene and help the enterprise to actively communicate with the tax authorities while sorting out the materials involved in the case for the enterprise and, in conjunction with the communication with the tax authorities, to advocate that the enterprise does not constitute tax evasion, pre-tax deduction for income tax, approved collection for income tax, and non-payment of late payment of value-added tax for bona fide acquisitions, to advocate the enterprise's viewpoints to the tax authorities.

iii. Filing administrative reconsideration and administrative litigation with tax authorities and actively defending their legitimate rights and interests.

If the conclusion of the audit stage is not satisfactory enough, the relevant invoiced enterprises may take up legal weapons and file administrative reconsideration or administrative litigation with the tax authorities. However, it should be noted that, according to Article 88 of the Law on Administration of Tax Collection, for the tax treatment decisions of the tax authorities requiring the transfer of input tax, payment of enterprise income tax and payment of late fees, the invoiced enterprise must pay the tax and late fees before filing a reconsideration, and can only file an administrative lawsuit with the court after the reconsideration is completed. As for the tax penalty decision issued by the tax authorities, the invoiced enterprise can directly file an administrative lawsuit to the court.