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.

Electric power companies may face the dilemma that suppliers are not qualified to issue VAT special invoices in the procurement process, and cannot deduct VAT inputs and EIT costs; in the production and marketing process, "surplus tickets" and sales on behalf of the power company are prone to involve the risk of false invoicing. From the perspective of enterprises, how to identify these risks and take corresponding countermeasures to curb the problem of false invoicing by combining with the requirements of tax compliance has become the focus of enterprises' attention. This paper makes a systematic description of the risks of false invoicing in the electric power industry and puts forward corresponding preventive suggestions.

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.

The initial cost of real estate project development is high, and a large amount of capital investment is required for pre-development. Many enterprises' own funds are difficult to meet the demand for engineering construction, and due to the strict approval of loans by financial institutions, in order to ensure that the project is carried out normally, the enterprises are forced to broaden the source of funds through other financing channels. However, according to the rules of the current tax law, when handling the land value-added tax settlement, the interest expenses incurred are subject to different deduction methods depending on the circumstances. Taxpayers should effectively grasp the scope and conditions of interest expense deduction to ensure maximum enjoyment of deduction.

The electric power industry is the most important key energy industry in the development of the national economy, a basic industry related to the national economy and people's livelihood, and a priority development focus in the economic development strategies of countries around the world. The tax declaration involved in the process of equity transfer of electric power company is the focus of tax authorities in recent years. Tax bureaus around the world have issued documents one after another requesting that equity transfers be subject to tax verification. Failure to declare or concealment of income will be recognized as tax evasion and face fines or criminal penalties. When transferring equity in a power company, a reasonable transaction price and investment cost need to be determined, or else adjustments or challenges from tax authorities may arise. These will affect the actual earnings and cash flow of the power company. The author intends to analyze the tax-related issues that may be involved by combining actual cases and the characteristics of equity transfer in the power industry.

In 2022, China's tax policy "reduction" is the leading word, which provides strong support for reducing the burden of market players, revitalizing enterprise cash flow and boosting the speed of economic development. The new combination of tax support policies from multiple perspectives, all-round care of key industries and people: large-scale tax rebate policy to ease the pressure of the shortage of funds for real enterprises; transportation, science and technology, courier and other industries to reduce the burden of specific industries; the introduction of a new special deduction for personal tax and personal pension tax policy to care for the birth of a child, old age, and other key issues... ...In order to ensure that tax policies are put into practice, tax supervision in 2022 has been further strengthened with the help of multi-departmental collaboration and tax big data, rectifying the network entertainment industry, strengthening investment supervision, and cracking down on fraudulent tax credits and tax refunds, etc., which effectively deterred the unscrupulous elements. This article takes stock of the tax-related cases and data of the State Administration of Taxation and local tax authorities in 2022 to get a glimpse of the sources and causes of tax risks in 2022, so as to provide suggestions for enterprises to strengthen tax compliance in 2023.