Pharmaceutical Industry Tax Compliance Report（2025）

The tax risk of the pharmaceutical industry is closely related to the issue of commercial bribery, showing the co-existence of false invoicing and commercial bribery, with obvious industry characteristics.2024 The National Health Commission, the Drug Administration, the Municipal Supervision Bureau and other departments have studied and issued policy documents on preventing and combating the issue of commercial bribery in the pharmaceutical industry, and have continued to investigate and deal with the pharmaceutical industry's ‘sales with money ‘Fourteen ministries and commissions jointly continued to rectify the unethical practices in the purchase and sale of medicines, and the Stock Exchange and the Securities and Futures Commission (SFC) focused on the reasonableness of the proportion of sales expenses and the compliance of invoices of listed pharmaceutical enterprises. As the country's efforts to rectify the problem of commercial bribery in the pharmaceutical industry continue to escalate, the tax department of the tax-related violations of pharmaceutical enterprises also continued to increase the intensity of the 2024 outbreak of a number of pharmaceutical enterprises in the false opening of a major case, tax evasion cases, triggering a series of tax risks such as pharmaceutical enterprises to make up for the payment of value-added tax, the payment of late fees, tax adjustments and penalties, and some of the enterprises have also been pursued for the false invoicing of the crime of criminal responsibility. How to do tax compliance beforehand to prevent potential tax-related risks, and how to effectively prove and defend against the tax-related risks afterwards have become issues of urgent concern and solution for the pharmaceutical industry.

Jan. 3, 2025, 1:49 p.m.

4556Views

The Land Value Added Tax in Real Estate Industry Compliance Report

Recently, the real estate market is no longer prosperous as it was before 2019. Influenced by the economic downturn, China's real estate development investment is in a downward trend, and land value-added tax revenue data across the country and provinces are generally declining in volatility. In response to the changes in the real estate market, the Central Economic Work Conference in December 2024 explicitly proposed to use a series of policies to stabilize the property market , effectively prevent and resolve risks in key areas. However, the legalization of land value-added tax (LVAT) in China has been lagging behind for a long time, and the existing regulatory system for LVAT is too general and lacks sufficient attention to details, resulting in local normative documents showing significant variability and localization.

Jan. 2, 2025, 4:26 p.m.

5283Views

Recycling Industry Tax Compliance Report (2025)

The orderly operation of the renewable resources industry is of great significance in improving the level of resource recycling, enhancing the ability to guarantee resource security and promoting green, low-carbon and recycling development. Over the years, the tax policies in the field of recycling and comprehensive utilization of renewable resources have been constantly changing, and in order to promote compliant operation and improve profit margins, the business models of enterprises in the renewable resources industry have been adjusted, which at the same time have also given rise to a number of tax issues.

Dec. 30, 2024, 3:17 p.m.

4661Views

Logistics and Transportation Industry Tax Compliance Report (2025)

Logistics and Transportation Industry has become an important bridge connecting production and consumption due to its comprehensive and fundamental nature, and as an important part of the national economy, its level of development has a direct impact on the operational efficiency of the national economy. Among them, road freight transportation, with its flexibility and convenience, occupies a dominant position among many modes of transportation. In recent years, with the rapid development of e-commerce, express delivery services and cold chain logistics and other new industries, the demand for road freight transportation has continued to grow, and the market scale has been expanding. With the in-depth integration of mobile Internet technology and Logistics and Transportation Industry, the market has seen the emergence of new business models such as vehicle-less transport and network freight transport, which rely on big data, cloud computing and other technologies, intensive integration and scientific scheduling of vehicles, sources of goods,

Dec. 27, 2024, 7:22 a.m.

5355Views

Flexible Employment Platform Tax Compliance Report (2024)

In recent years, with the development of Internet technology and national policy support for the platform economy and flexible labor industry, flexible labor platform, as a bridge connecting labor-using enterprises and flexible workers, has shown a booming trend. Relying on Internet information technology, flexible labor platforms have opened up information barriers between labor-using enterprises and talent resources, improved the efficiency of human resources allocation, and played a key role in promoting employment and safeguarding people's livelihood. In terms of taxation, the flexible employment platform also helps to solve the problem of employing enterprises not being able to issue invoices for employing enterprises due to the provision of labor services by individual workers in the course of their operations, reducing the tax costs of employing enterprises, and has gained the favor of employing enterprises.
However, as a new industry organization, flexible labor platform is still in a period of rapid development and imperfection, and the relevant national policies are also in the process of further follow-up, the strong regulatory trend in the field of taxation has appeared, and tax preferential policies, such as financial rebates, will be gradually cleaned up.2023 A number of suspected false invoicing cases of the flexible labor platform have erupted, which reflects the weak links existing in the business development and tax processing of the flexible labor platform. On the one hand, some flexible labor platforms have made their business and tax treatment process weak. On the one hand, some flexible labor platforms used the fiscal rebate tax policy as the capital for false invoicing, and wantonly issued false invoices to outsiders in order to make unlawful benefits such as handling fees, resulting in the loss of the national tax interests and disrupting the order of tax collection and management; on the other hand, some flexible labor platforms were oriented on business and profits and neglected the platform tax compliance construction, resulting in the loopholes and deficiencies of the business model, which were utilized by the lawless elements to commit false invoicing and other illegal criminal acts. On the other hand, some flexible labor platforms are business and profit oriented, neglecting the platform tax compliance construction, resulting in loopholes and deficiencies in the business model, which are used by unlawful elements to carry out illegal and criminal behaviors, such as false opening, and fall into criminal risks. Therefore, it is urgent for flexible labor platforms to strengthen tax compliance construction and prevent tax risks.
Based on the in-depth observation of flexible labor platforms, HuaShui team has prepared this "Flexible Labor Platform Tax Compliance Report (2024)". This report summarizes the development of flexible employment industry and flexible employment platforms, observes their tax policies and regulatory trends, focuses on typical tax-related cases of flexible employment platforms in 2023 and discusses the causes of tax-related risks, summarizes the main tax-related risks of flexible employment platforms and their manifestations, puts forward the key points of administrative response and criminal defense strategies on the basis of the aforementioned, and finally provides suggestions for the daily tax compliance management of flexible employment platforms. Finally, it provides suggestions for the daily tax compliance management of flexible employment platforms, hoping to contribute to the sustainable and healthy development of the flexible employment industry.
This report is divided into eight sections, with a total text of about 25,000 words.

Jan. 30, 2024, 1:52 p.m.

6907Views

Investment Promotion Tax Compliance Report（2024）

Investment promotion is an important path for local governments to use external resources to promote regional economic development, which is of great significance for promoting local employment, optimizing local industrial structure and expanding the scale of economic development. For a long time, to give investment enterprises tax incentives, financial incentives is a common way for local governments to attract investment, this kind of financial and tax support policies effectively alleviate some of the pressure on the capital turnover of enterprises, reduce the operating costs of enterprises, stimulate the vitality of the development of enterprises, which in turn boosted the development of the regional economy. However, in practice, there are some financial and tax incentives in violation of higher laws to give enterprises the phenomenon of tax rebates, some enterprises in the process of applying the policy of false opening, tax evasion and other issues.
For a long time, there are usually links in the business chain of resources recycling industry, logistics and transportation and flexible labor that run on local fiscal and tax incentives, and the approved levy policy in some regions has also become an important consideration in the design of enterprise equity structure and tax-saving arrangements for high net worth individuals. With the spread of clean-up and standardization of tax and other preferential actions, local illegal tax preferential policies have gradually contracted, and fiscal rebates have gradually become the main local fiscal and tax preferential policies. In recent years, illegal tax rebate behavior and tax puddles in some areas have triggered the attention of many departments. In January, the National Audit Work Conference put forward a six-pronged audit work, the second of which included "revealing in-depth the illegal introduction of 'small policies' in investment promotion in some places, Formation of 'tax depressions' and other issues, and seriously investigate and deal with irregular tax rebates"; Rao Lixin, deputy director of the State Administration of Taxation, also pointed out at a press conference held by the State Council Information Office on January 18, that tax-related issues in the context of investment promotion should be seriously investigated and dealt with. "The National Tax Work Conference also explicitly prohibits the participation of tax departments and tax cadres in cooperating with illegal investment promotion. With the normalization of the eight departments' joint action to rectify tax fraud and the comprehensive advancement of tax collection and management informationization and digitalization, the tax compliance problems in the field of investment promotion are facing a severe situation.
In the cases of false opening and tax evasion involving investment promotion and taxation policies that have broken out so far, the financial cadres of local governments, investment promotion platforms and investing enterprises are facing different degrees of legal liability. Huashui combines its continuous research on investment promotion and its experience in representing the latest tax-related cases to write this report, which analyzes in depth the tax environment of investment promotion under the new situation of tax collection and management, the business model of investment enterprises, the tax-related legal risks of each subject, and the tax compliance management, etc., with a view to providing useful references for the local governments, investment promotion platforms, and investment enterprises.

Jan. 29, 2024, 3:21 p.m.

5539Views

Tax Compliance Report in Investment and Financing (2024)

Along with China's economic development, the investment capacity of high net worth individuals (HNWIs) in Mainland China has strengthened. According to the China Private Wealth Report released by China Merchants Bank in 2023, as of 2022, the number of HNWIs in China reached 3.16 million, holding a total of RMB 101 trillion in investable assets, and corporate equity investment is also one of the main directions of HNWIs' cash outflow. However, direct shareholding by natural persons has a high tax burden, and individual investors are exploring other shareholding modes in order to reduce their tax burden. At this time, the shareholding platform, as a shareholding structure designed under the combined effect of local tax incentives and the stability of listed companies' shareholdings, has entered the vision of HNWIs and become an important tool for HNWIs' foreign investment. In recent years, with the tightening of tax regulation for HNWIs and the extensive and in-depth cleanup of local tax approvals and financial rebate policies for irregularities, the tax advantage of the shareholding platform is no longer available, and if the shareholding platform is not dismantled, it will face the situation that the tax burden for future equity transfers will not be reduced but rather increased, while the dismantling of the shareholding platform may immediately be burdened with a high level of tax. At the same time, HNWIs and their equity transfer behaviors have become an area of continuous attention and key investigation by tax supervision, and it has become a dilemma for HNWIs to dismantle or not to dismantle their shareholding platforms. In practice, it has been common for individual investors to dismantle their shareholding platforms, among which, the most common means of dismantling the shareholding platforms for HNWIs is to cancel the non-trading transfers of shares. However, this approach has also brought a lot of tax risks to HNWIs, which is evidenced by the cases of various back taxes and late payment liabilities penetrating into the shareholders and partners. In addition, the promulgation of the new company law on December 29, 2023 also has potential tax implications for individual investors through amendments to various aspects such as registered capital, governance structure, principal liability and establishment and exit.
The "Tax Compliance Report in Investment and Financing (2024)" is compiled by Hwuason based on the analysis and research of tax administration policies for HNWIs, combined with the tax-related typical cases in investment and financing that China Tax has been involved in in recent years, with the aim of revealing the major tax risk points of domestic investment and financing for HNWIs based on the characteristics of tax administration of HNWIs and putting forward targeted and feasible compliance suggestions on this basis, so as to Provide guidance and reference for the tax compliance of investment and financing business of HNWIs.

Jan. 24, 2024, 2:21 p.m.

3938Views

Non-Ferrous Metal Industry Tax Compliance Report (2024)

Non-ferrous metals are essential raw materials in fields such as electronics, aviation, automotive, and construction, playing a crucial role in economic and defense development as well as societal progress. In the realm of taxation, the non-ferrous metal industry has witnessed a surge in tax-related cases in recent years. Issues related to taxation in the buying, selling, and transportation of non-ferrous metals have become increasingly prominent, giving rise to numerous tax compliance challenges.

Within the buying and selling transactions of non-ferrous metals, some suppliers, particularly retail ones, are either unwilling or unable to issue value-added tax (VAT) special invoices. This results in non-ferrous metal enterprises struggling to obtain input invoices. In order to bridge this gap and obtain valid pre-tax deduction certificates for corporate income tax, some companies resort to methods such as operating under the umbrella of another business, seeking third-party invoice issuance, or even purchasing invoices. As the "anti-fraud and anti-deception" special campaign intensifies and transforms into a routine effort jointly undertaken by eight government departments, the non-ferrous metal industry has witnessed a surge in cases of fraudulent invoicing, exposing companies and their executives to administrative and even criminal liabilities.

Due to the high transportation costs associated with non-ferrous metal transportation, the industry has adopted a trading model of "unified warehousing and delivery at the end." However, as no actual goods transportation occurs in the intermediary stages, this model is prone to being deemed as lacking genuine goods transactions, thereby triggering risks of fraudulent invoicing.

Furthermore, in recent years, tax authorities in various regions have conducted special inspections on gold invoices, uncovering numerous cases of fraudulent issuance. In these cases, individuals involved in the fraud use aliases to fraudulently issue non-ferrous metal invoices. Due to the chain-like deduction features of value-added tax, the risk of fraudulent invoicing is transmitted downstream to non-ferrous metal enterprises.

In terms of judicial practice, publicly disclosed cases of fraudulent invoicing in recent years have included instances where non-ferrous metal companies were charged with the illegal purchase of VAT special invoices despite obtaining genuine invoices through honest means. There have also been cases where the issuance of fake invoices for loan fraud was deemed as not constituting fraudulent invoicing. As the reform of criminal compliance mechanisms by procuratorates is rolled out nationwide, and courts in various regions initiate compliance pilot programs during the trial phase, these developments and changes in judicial practice present new opportunities for non-ferrous metal enterprises involved in tax-related criminal defenses.

Based on our in-depth observation of the non-ferrous metal industry and our experience in handling tax-related cases, this report is crafted by Huashui to thoroughly analyze the tax environment for the non-ferrous metal industry under the new situation of tax administration. We compile and analyze tax-related criminal and administrative cases involving non-ferrous metal enterprises from 2018 to 2023, revealing the current status, causes, and latest changes in tax-related criminal risks for the non-ferrous metal industry. Building upon this analysis, we provide compliance management suggestions for enterprises, aiming to assist non-ferrous metal companies in conducting tax management legally and compliantly, strengthening internal risk control and external risk isolation, and effectively addressing and mitigating tax-related legal risks.

Jan. 22, 2024, 2:47 p.m.

3836Views

Tax Compliance Report for High Net Worth Individuals（2024）

Along with China's economic development, the number of High Net Worth Individuals (HNWIs) in Mainland China continues to grow. According to the China Private Wealth Report 2023 published by China Merchants Bank, "HNWIs" are defined as individuals with investable assets of RMB 10 million or more. Investable assets include cash, deposits, stocks, bonds, funds, insurance, bank wealth management products, offshore investments and other domestic investments and investment properties, excluding owner-occupied properties. By 2022, there will be 3.16 million HNWIs in China, holding a total of RMB 101 trillion in investable assets. In terms of the types of people, HNWIs mainly include private entrepreneurs, executives of central enterprises, state-owned enterprises, large private enterprises, technical backbone personnel, film and television personnel, net celebrities and head self-media personnel, sports industry practitioners, personnel in high-paying industries such as finance, professional managers, and those who have access to hold a large amount of money due to family connections. With the rapid growth in the number of HNWIs in Mainland China, who can utilize the large amount of investable assets they hold for personal investment, and at the same time have generally higher salary income, HNWIs need to bear a heavier tax burden, and there is an increasing demand for tax saving through tax planning, coupled with the cross-regional and international nature of the distribution of their wealth and sources of income, there are various forms of planning by HNWIs. At the same time, tax authorities around the world have tightened their control over individual income tax, and HNWIs have become the focus of continuous attention and investigation by tax regulators. In practice, there are many cases of HNWIs being tax adjusted or recognized as tax evaders.
HNWI Tax Compliance Report (2024) is compiled by Hwuason based on the analysis and research of tax administration policies for HNWIs, combined with the typical tax-related cases of HNWIs that China Tax has been involved in in recent years. The report aims to provide guidance on tax compliance for HNWIs based on the characteristics of HNWIs' tax administration and reveals the major tax risk points of HNWIs both at home and abroad, and on the basis of which it puts forward targeted and feasible compliance suggestions.

Jan. 19, 2024, 2:35 p.m.

6163Views

Logistics and Transportation Industry Tax Compliance Report（2024）

The logistics industry integrates transportation, warehousing, freight forwarding, intermodal transportation, manufacturing, trade and information industries. Among them, transportation is one of the key links in logistics, and the integration of logistics and transportation forms the logistics and transportation industry, which plays an important role in promoting the development of national economy. And road transportation plays a fundamental role in the logistics and transportation industry with its advantages of strong adaptability, mobility and flexibility, fast and direct access. With the in-depth integration of mobile Internet technology and the logistics and transportation industry, the market has emerged as a new business model such as car-free transport, network freight, etc., which relies on mobile Internet technology to build a logistics information platform, and effectively promotes the ability of resource integration through the innovation of the management and organization mode, and promotes the transformation and upgrading of the logistics and transportation industry. At the same time, the basic form of transportation, which is "zero, scattered, small and weak", remains unchanged, the proportion of individual drivers is high, and the VAT deduction chain of logistics and transportation industry is broken, which still restricts its further development. In order to effectively reduce the tax burden, the State Administration of Taxation (SAT) has successively issued the State Administration of Taxation Announcement No. 30 of 2017, the State Administration of Taxation Announcement No. 55 of 2017 and other policies to respond to the voices of the taxpayers and solve the pain points of the industry, but it still hasn't fundamentally solved the persistent problem of insufficient input deduction in the logistics and transportation industry.
Some logistics and transportation enterprises chose to reduce VAT and EIT by outsourcing invoices or applying for fiscal rebates, thus triggering the risk of tax evasion and false invoicing, with a wide range of implication and impact.2023 A number of cases of external false freight invoicing by means of falsely opening oil and gas invoices, ETC invoices, etc., broke out again. In addition, the new industry such as network freight transportation and non-vessel shipping also broke out with large cases of false invoicing, and the risk was spread to tens of thousands of enterprises downstream, triggering industry shocks. There is an urgent need to strengthen tax compliance in the logistics and transportation industry to prevent tax risks.
Based on the in-depth observation of the logistics and transportation industry, Huashui Team has prepared this "Logistics and Transportation Industry Tax Compliance Report (2024)". This report summarizes the development of the logistics and transportation industry, observes its tax policies and regulatory trends, focuses on typical tax-related administrative and criminal cases in the logistics and transportation industry in 2023, discusses the causes of tax-related risks in the logistics and transportation industry, summarizes the major types of tax-related risks in the logistics and transportation industry and puts forward the key points of defense on the basis of the foregoing, with the hope of contributing to the construction of tax compliance in the logistics and transportation industry.
This report is divided into eight sections, and the full text is about 26,000 words.

Jan. 17, 2024, 2:07 p.m.

6667Views