Editor's Note: On April 18, Teng Wei and other judges of the Supreme Court issued the “Understanding of the Two Supremes' Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases of Hazardous Tax Collection and Administration” (hereinafter referred to as the “Interpretation and Application”), which was published, and which gave a clear interpretation of the relationship between the crime of illegally purchasing special invoices for value-added tax (VAT) and that of falsely opening VAT invoices. The Interpretation and Application (hereinafter referred to as the Interpretation and Application) was published, in which a clear interpretation of the relationship between the crime of illegal purchase of VAT invoices and the crime of false VAT invoices was given. This interpretation has set up a certain obstacle to the way of criminalization of the crime of false invoicing, and it is difficult to obtain acquittal for cases that do not constitute the crime of false invoicing, and the number of cases in which the defendant is convicted of the crime of illegal sale of invoices has been rising. A total of 41 cases involving the purchase of invoices by defendants have been decided, 12 cases have been convicted of illegal purchase of invoices, 29 cases have been convicted of false invoicing, no cases have been convicted of false invoicing and tax evasion, and there have been no acquittal cases. In this context, whether there is still room for acquittal of enterprises suspected of false invoicing? In this article, we will take the practice cases as an entry point to discuss how the invoiced enterprises should go on the way of getting out of the crime.

I.Case observation: the recipient enterprise which does not constitute false invoicing is sentenced for illegal purchase of invoices

(Ⅰ)Real case analysis:（2024）沪0151刑初223号

Basic facts: the defendant in this case, Li, a company's actual operator. It was found that from 2020 to 2022, in order to collect commission fees, Li was introduced and contacted by an intermediary to purchase VAT invoices with a tax rate of 6% from downstream companies at a price of about 9%-12% of the face amount. Upon investigation, the above invoices totaled 359, with a total price and tax amount of more than 35.91 million yuan, involving a tax amount of more than 2.03 million yuan.20 In March 2022, in order to reduce the tax burden of the enterprise, Defendant Li Mou was introduced and contacted by Shi Mou and others, and purchased from downstream companies VAT invoices with a tax rate of 6% at a price of about 11% of the face value, totaling 41 invoices, with a total price and tax amount of 4.25 million yuan, involving a tax amount of more than 0.24 million yuan.

Court Decision: Regarding the above circumstances of Li Mou, the court held that defendants Li Mou and Shi Mou violated the management system of VAT invoices and illegally purchased VAT invoices, and their behaviors have constituted the crime of illegally purchasing VAT invoices. The court finally found that defendant Li Mou was guilty of illegal purchase of VAT invoices (unit) and sentenced to six months of fixed-term imprisonment and a fine of RMB 20,000 yuan; guilty of illegal purchase of VAT invoices and sentenced to one year and eight months of fixed-term imprisonment and a fine of RMB 40,000 yuan, and decided to implement the crime of fraudulent invoicing together with the crime of fixed-term imprisonment of two years, probation of two years and six months, and a fine of RMB 70,000 yuan.

Case Comment: In this case, the defendant Li Mou purchased VAT invoices at a price higher than the face value of the invoice, and the price he paid exceeded the tax benefits he could deduct, and the side of the invoicing side also indicated that he expected the invoicing party to pay the VAT truthfully, and subjectively denied that the defendant's subjective purpose of fraudulently offsetting the VAT tax did not constitute the crime of false invoicing of VAT. However, on the basis of not constituting false invoicing, this case did not obtain a straight acquittal, but was punished for illegal purchase, reflecting that there is a certain change in the conviction trend of the current judicial practice.

(Ⅱ)The recipient who does not constitute the crime of false opening of the case was sentenced to illegal purchase become a trend

Previously, a number of cases of acquittal for the crime of false invoicing appeared in practice, such as the case of Zhang Mouqiang issued by the Supreme Court, the case of Li Moujia and Li Mouyi for the false invoicing of special bills (2016) Chuan 15 Criminal End 113, the case of Cui Moumou for false invoicing of invoices used to offset tax, etc., in which the invoicing party was acquitted and the recipient was of course also acquitted. The author learned that, similar to the above cases, the invoicing party pays invoicing fees higher than the tax rate, and there are also cases handled according to the innocence of the case.

However, through databases such as Referee Network and WK First, the author searched the refereed documents after the publication of Understanding and Application with the keyword of false invoicing of VAT and the condition of the crime of jeopardizing the tax collection and management, and after reading and filtering, there were a total of 41 decided cases involving the defendant's purchasing of the invoices, a total of 12 convicted of the crime of illegally purchasing the invoices and 29 convicted of the crime of falsely opening the invoices, and there were no cases in which the defendants were convicted of the crime of false invoicing or tax evasion, and there were also no Acquitted Cases (as of January 23, 2025) As most of the cases are not publicized through the relevant platforms, the above data has certain limitations, but it can also prove that the trend of convicting the recipient enterprises of illegal composition is gradually becoming more and more difficult to fight for acquittal. The reasons for this trend, and whether or not the companies being invoiced are still able to obtain acquittals, will be further discussed below.

Ⅱ.The positioning of“implicated offender” of false invoicing and illegal purchasing compresses the room of innocence for the invoiced enterprises

(I) The two Supremes have recognized that illegal purchase is a means of false invoicing.

The Understanding and Application issued by the Supreme Court Judge holds that “the recipient of the false VAT invoices often obtains the input invoices from others in the name of payment of ‘invoicing fee’ and ‘tax point’, etc., and then deducts them, which forms an illegal linkage between the invoicing party and the recipient. The relationship between the invoicing party and the recipient of the invoice is also formed between illegal sale and illegal purchase of VAT invoices.” According to the above understanding and in conjunction with the following, the Supreme Court Judge held that: firstly, illegal purchase and illegal sale are both behavioral crimes, which only require the invoiced party to sell the VAT invoices as commodities and pay the consideration; secondly, for the recipient, illegal purchase of VAT invoices and false issuance of VAT invoices are implicated in a relationship between the means and the end, so that if the recipient obtains the falsely-issued invoices and then fraudulently offsets the taxes, it will have the same relationship as that of illegal purchase of VAT invoices. If he or she obtains the false invoice and then cheats the tax, he or she has achieved the criminal purpose of falsely issuing VAT invoices by the criminal means of illegally purchasing VAT invoices, and shall be convicted and punished in accordance with the principle of one-fold punishment. The prosecutor of the Supreme Prosecutor's Office also agrees with this point of view, and in his interpretation of the crime of illegally purchasing special invoices, he writes, “For the act of paying ‘invoicing fees’ for purchasing special VAT invoices and offsetting them, the crime of illegally issuing special VAT invoices shall be punished by conviction.” It is the purchase of special invoices as the means of the crime of false invoicing, and both the purchase behavior and the offsetting behavior constitute false invoicing.

(II) Illegal Purchase Becomes the Second Best Choice for the Crime of False Invoicing, and It is Difficult for Enterprises Receiving Invoices to be Acquitted Again

For a long time, the crime of false invoicing of VAT belongs to the purpose crime, behavioral crime or result crime, whether it is the legal theory or judicial practice circles are constantly arguing, and there is no consensus. In this regard, the Supreme People's Court, by way of typical cases, made it clear that if a false VAT invoice is not issued for the purpose of fraudulently offsetting tax, and if it does not result in fraudulent loss of tax, it does not constitute the crime of false VAT invoicing. This is the first time that the Judicial Interpretation of the Two Supremes has clarified this point in the form of judicial interpretation.

With the repositioning of “two Supremes” on illegal purchase, it is now only necessary to have the act of purchasing special invoices as commodities to constitute a crime. In other words, in the past, the recipient does not constitute the crime of false invoicing can be directly acquitted, but now once involved in the case of false invoicing, even if it does not constitute false invoicing, can also constitute an illegal purchase, it is extremely difficult to get a not guilty verdict. As listed in Part I, the number of cases of illegal purchase characterized as a false invoicing crime has increased, and the lack of acquittal cases also proves that the criminal risk of the recipient is increasing.

Ⅲ. The road to innocence for the recipient enterprise: reflecting on the legislative purpose and constituent elements of the crime of illegally purchasing a promissory note

(I) The legislative intent of the crime of illegal purchase of special invoices is to combat the illegal purchase of blank special invoices.

From the viewpoint of the legislative intent of illegal purchase/sale, these two crimes are intended to combat the illegal circulation of blank VAT invoices by both buyers and sellers, and to undermine the invoice management order. With the exit of blank invoices from the stage, these two offenses gradually fell silent. After the publication of Understanding and Application, non-blank VAT invoices are included in the scope of regulation of the two offenses, which awakens the long-dormant crime of illegal purchase/sale. The author believes that this move will bring non-negligible negative impacts on the practice, which still needs to be cautiously reviewed.

The crime of illegal purchase of special invoices and illegal sale of special invoices is a joint crime, and its protection of legal interests and regulation of the criminal object is the same, non-blank invoices into the illegal purchase of the object of the crime, will lead to the need to be included in the scope of illegal sale. As the constitutive elements of the crime of illegal sale of invoices are simpler, and the legal penalty is the same as that of the crime of false invoicing, the balance of the criminal law system is bound to be undermined, and in fact, the crime of false invoicing that needs to be demonstrated whether there is a fraudulent offsetting purpose and the result of the loss of tax is emptied, and the crime of behavioral incrimination is turned into a disguised lowering of the threshold of the incrimination of the crime, which also results in the result of the crime of mismatch of responsibility and punishment. Therefore, non-blank invoices should be excluded from the scope of regulation of illegal purchase/sale, and the recipient does not constitute the crime of false invoicing or the crime of illegal purchase.

(Ⅱ) Illegal purchase of special invoices shall not be constituted if there is no consideration.

In addition to selling VAT invoices as commodities, the “Understanding and Application” of the “two Supremes” have repeatedly mentioned that the recipient has to pay “invoicing fee”, “tax point” and other consideration to constitute the crime of illegal purchase of special invoices. Constitutes the crime of illegal purchase of special invoices, and this element excludes the cases of folio and ring billing. In practice, folio and ring billing are generally for the purpose of non-fraudulent tax credit such as inflated performance, and the issuer and the recipient reach an agreement to issue invoices to each other without charging the consideration. Therefore, in the ring open, folio situation has been “two Supremes judicial interpretation” clearly does not constitute the basis of false invoicing, also does not constitute the crime of illegal purchase of special invoices, can get a complete acquittal.

(Ⅲ) Illegal purchase of special invoices can also be guilty of tax evasion, and should constitute tax evasion from a heavy penalty.

The Supreme Court judge creatively put forward the scope of taxable obligation as the criterion to distinguish between the intent to cheat national tax and the intent to evade tax obligation. Specifically, if a taxpayer, within the scope of taxable obligation, makes deductions through false enhancement in order to pay less tax, even if the means of false deduction is adopted, the subjective intention is still not to pay less tax, and the crime of tax evasion should be dealt with. Accordingly, the perpetrator's payment of consideration for the illegal purchase of special invoices and then offsetting the special invoices, resulting in the reduction of tax obligations within the scope of taxable obligations, also constitutes the crime of tax evasion. At this time, the illegal purchase of special tickets and tax evasion imaginary competition, if the illegal purchase means and tax evasion results in the usual, can also be identified as the two are implicated, regardless of which point of view should be from a felony, according to tax evasion.

Tax evasion is compared to illegal purchase with administrative predetermined provisions and the provisions of the crime. The second paragraph of Article 3 of the Judicial Interpretation of the Two Supremes makes it clear that a taxpayer who has evaded payment of tax without a notice of recovery issued by the tax authorities according to law shall not be held criminally liable. Therefore, after the invoiced enterprise strives for the characterization of tax evasion, it can first seek a breakthrough in the procedure, apply for the case to be returned to the administrative stage, and after the tax authorities have issued the notice of recovery, it will actively make up for the tax payable, pay the late payment penalty and accept the administrative penalty, and strive for the innocent result through the exculpatory provisions of the tax evasion crime.

Ⅳ.The defense strategy: case difficult to fight for acquittal should be turned to illegal purchase of misdemeanor defense in due course

In terms of penalty, illegal purchase is punishable by less than five years of imprisonment or detention, which is much lighter than false invoicing under the same amount of crime. As can be seen from the cases compiled in Part I, some of the cases have similarities with the crime of false invoicing, but the recipients of the invoices were given probation after they fought for the characterization of illegal purchase. Therefore, in cases where it is difficult to fight for a plea of not guilty, false invoicing cases should be prioritized to change the charge to illegal purchase. The defense of misdemeanor can start from the following points:

(Ⅰ) The invoice obtained by the recipient has a corresponding real transaction

In the misdemeanor defense of the case of false VAT invoices, the primary premise lies in arguing that there is a real transaction. Specifically, the following multi-dimensional evidence materials can be used to form evidence: First, the materials of goods delivery, including but not limited to logistics and transportation documents, warehousing records, quality inspection reports and goods receipt vouchers, such documents need to be in the time nodes, goods specifications and the transaction contract to maintain the logic of consistency; Second, the materials of the flow of funds, you need to retrieve the bank water, third-party payment vouchers and payment instructions to prove that the transaction consideration was actually paid and the amount of money. The actual payment of the transaction consideration and the amount is consistent with the contract agreement, invoice records, in particular, need to exclude the “funds back” and other abnormal operations, or explain the reasonableness of the “funds back”; Third, the reasonableness of the transaction background, combined with the industry practice, enterprise production and operation needs and business logic, to prove that the transaction Third, the reasonableness of the transaction background, taking into account the industry practice, enterprise production and operation needs and business logic, to prove that the purpose of the transaction is in line with the normal operational needs, for example, through the procurement contract, production plan, sales ledger, etc. to prove that the use and quantity of goods match the actual production capacity of the enterprise. When there are affiliation, sales and other special business model, should focus on proving the actual business subject and the nominal invoicing subject of the rights and obligations of the relationship, through the business cooperation agreement, profit distribution records and evidence of actual fulfillment, to confirm that the substance of the transaction belongs to.

(Ⅱ) The recipient objectively does not cause the loss of state tax

As the core tax of turnover tax, the underlying logic of VAT system design is to realize tax neutrality through the chain mechanism of “ring deduction, no re-collection of tax”, and the right of input tax deduction originates from the real turnover of goods or services instead of relying on the form of invoice alone. When the recipient obtains the invoice through a third party, if there is a real delivery of goods or provision of services, even if there is a separation between the subject of invoice issuance and the subject of the actual transaction, as long as the VAT obligations in each link have been fulfilled in full (the issuing party has declared the output tax amount truthfully, and the recipient's offsetting amount has not exceeded the scope of the offsetting amount of the real transaction), the VAT offset chain can still be realized to operate in a closed-loop, and the total amount of national tax has not been eroded. The total amount of state tax is not eroded. For example, Company A sells goods to Company B, but for some reasons it is unable to issue an invoice, and Company C invoices Company B on its behalf. If the transaction between A and B really exists and Company C truthfully declares the output tax amount and pays the corresponding tax, Company B's behavior of offsetting the input tax amount with Company C's invoice will not lead to a net loss of tax because Company C has already filled up Company B's offsetting space by paying tax.

(Ⅲ) The Defendants do not subjectively have the intention of tax fraud

The crime of false opening of VAT invoices, as mentioned before, needs to cause the loss of national tax as a constituent element. In the crime of the invoicee enterprise letting others make false invoices for itself, this loss of tax mainly refers to the invoicee enterprise offsetting the input tax that should not have been offset. However, in the context of real transactions, the recipient's purpose of obtaining invoices through proxy invoicing is often to balance the input and output tax burden, satisfy audit requirements or optimize financial statements, and its subjective pursuit is the construction of the appearance of compliance rather than the illegal appropriation of tax benefits, so it does not constitute the crime of false invoicing.

As for the case of issuing invoices on behalf of others, when the perpetrator's behavior of obtaining invoices by paying invoicing fees has satisfied the objective element of “illegal purchase” in Article 208 of the Criminal Law, even if the perpetrator subjectively lacks the intention of tax fraud, he can still be convicted and sentenced for the crime of illegal purchase of VAT invoices based on the principle of unity of the law and order. For example, in (2023) Shanghai 0109 Criminal No. 881 Yang Mou Case and (2024) Shanghai 0151 Criminal No. 22 Li Mou Case, the defendants purchased the VAT invoices at a price higher than the face value of the invoices, and subjectively denied the subjective purpose of the defendants to cheat VAT, which did not constitute the crime of false invoices, and convicted and sentenced the crime of unlawful purchase of VAT invoices.