Petrochemical Industry Tax Compliance Report (2023)

Since 2017, with the "Golden Tax Phase III" and refined oil products module coming online one after another, tax audits have been rolled out for the petrochemical industry in various places, and a large number of petrochemical tax-related cases have gradually surfaced. Unlike other invoicing crimes committed mainly for the purpose of cheating VAT, petrochemical tax-related cases are industry-specific, mainly in the form of cheque-altering cases, in which the perpetrators not only do not underpay or underpay VAT, but also create VAT tax sources for the local area, and the perpetrators engage in cheating with the purpose of evading consumption tax. From the results of tax administrative and criminal cases in various places in recent years, this type of cases shows obvious regionalization characteristics. After the refined oil invoice module went on line, new types of bill-changing transactions continued to emerge, and various types of bill-changing cases, such as industrial white oil, outsourced processing, and gasoline-to-transportation, driven by VAT interests, erupted one after another, and the risk of tax-related risks for petrochemical enterprises remained severe. Since 2022, there have been some adjustments and changes in the tax collection and management situation and priorities, types of tax-related cases and tax-related risks in the petrochemical sector. The overlay of variable ticket risk and consumption tax compliance risk makes the tax-related risks that petrochemical enterprises need to prevent and respond to more complicated. The "Petrochemical Industry Tax Compliance Report (2023)" is a legal research report compiled based on Huatax's in-depth observation of the petrochemical industry and profound summary of its experience in representing petrochemical industry tax-related cases. It aims to reveal the current situation of petrochemical industry's tax-related case handling and investigation trends, analyze the behavioral pattern changes and tax-related risks of petrochemical industry's tax-related cases, and put forward professional strategies for tax-related dispute resolution and suggestions for complying with the operation in order to provide a comprehensive solution for the petrochemical enterprises to prevent and respond to tax-related risks. The report also proposes professional strategies for tax-related dispute resolution and recommendations for compliance management, with a view to providing useful guidance for petrochemical enterprises to prevent and respond to tax-related risks.

Nov. 22, 2023, 7:57 p.m.

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Foreign Trade Industry Tax Compliance Report (2023)

In recent years, China's foreign trade has maintained a strong development trend. It has maintained the status of the world's top goods trading country for six consecutive years since 2017, and the total value of imports and exports in 2022 exceeded the 40 trillion yuan mark for the first time. The rapid development of foreign trade cannot be separated from the support of the export tax rebate policy. Export tax rebate refers to a tax system in which the state refunds to export enterprises the import tax on raw materials of exported goods as well as indirect taxes such as value-added tax (VAT) and consumption tax (CST) that have been paid at various stages of domestic production and circulation, so that exported goods can enter the international market at a price that does not include indirect taxes and participate in international competition.Between 2016 and 2021, China's tax authorities handled an accumulated total of export tax rebates (exemptions) of 8.75 trillion yuan, the In the first 11 months of 2022, the country's cumulative export tax refund (exemption) exceeded 1.7 trillion yuan. Against the backdrop of the changing international situation, the country has further improved the efficiency of export tax refunds, which has effectively energized foreign trade enterprises and reduced their burden.
In order to ensure the orderly development of the foreign trade industry and regulate the order of export tax rebates, the State has always taken a high-pressure stance to crack down on illegal and criminal behaviors such as fraudulent export tax rebates, and to curb the illegal and criminal offenses of tax cheating and fraudulent invoicing in the foreign trade industry, which has resulted in the outbreak of a number of major criminal cases. In addition, under the concept of "who exports, who collects foreign exchange, who refunds taxes, who is responsible for", the export enterprise bears most of the tax risk, or because of non-compliance with the documents can not be refunded, or involved in cases of fraudulent opening, tax fraud. Therefore, foreign trade enterprises need to strengthen tax compliance in 2023.
Based on the in-depth observation of foreign trade industry and the profound summarization of the agency experience of tax-related cases of foreign trade enterprises in recent years, Huatax team has prepared this "Tax Compliance Report of Foreign Trade Industry (2023)" to reveal the sources and causes of tax-related risks in foreign trade industry as well as the trend of tax compliance in 2023, and put forward the targeted defense strategies and compliance suggestions on the basis of which with a view to avoiding the tax administrative and criminal risks and achieving healthy tax compliance operation for the foreign trade enterprises, criminal risks and realize healthy development of compliant operation.

Nov. 22, 2023, 6:23 p.m.

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Pharmaceutical Industry Tax Compliance Report (2023)

Pharmaceutical industry, refers to the pharmaceutical manufacturing industry including chemical raw material drug manufacturing, medical device manufacturing, proprietary Chinese medicine manufacturing, Chinese medicine tablets manufacturing and other industries. The development of the pharmaceutical industry has experienced the shock of policy changes and is rapidly picking up. According to statistics, the number of pharmaceutical enterprises above the national scale continued to decrease from 7,541 in 2016 to 7,392 in 2019, but it rapidly rebounded after 2020, with a total of 8,629 as of 2021. This is on the one hand related to the gradual stabilization of the pharmaceutical industry's "two-invoice system" and other policies, and on the other hand, thanks to the incentives for a specific period of time. However, the background of the rapid development of hidden worries.
For a long time, in the field of pharmaceutical purchasing and marketing, there is a persistent problem of low efficiency and high cost of drug transportation and distribution, and at the same time, facing the doctors and medical representatives accepting kickbacks, pharmaceutical enterprises "with gold sales" and other corruption problems, forming an interlocking grey chain, the pharmaceutical enterprises due to rebates, kickbacks and costs lead to further compression of profits, thus becoming the Pharmaceutical industry false opening, tax evasion behavior repeated motive. The "two-ticket system" reform and the "4+7" centralized purchasing model seek to eliminate the problem of excessively high drug prices caused by multiple distribution links in the past from the sales chain of pharmaceutical enterprises, but because the existing distribution of benefits and the drug distribution model has not been completely changed, the costs of pharmaceutical enterprises have remained high and have begun to rise. However, due to the lack of a radical change in the distribution of benefits and the drug distribution model, pharmaceutical companies, with high costs, have begun to extract funds through bills from other areas such as the production, marketing and advertising of drugs, making the problem of invoice violations in the pharmaceutical industry still serious.20 From 2021 to 2022, a number of cases of fraudulent invoicing in the pharmaceutical industry erupted across the country, underscoring the necessity for the pharmaceutical industry to strengthen its tax compliance.
Based on the focused research on tax-related criminal cases in the pharmaceutical industry in recent years and long-term observation of the pharmaceutical industry, Huatax team prepares this "Pharmaceutical Industry Tax Compliance Report (2023)". By analyzing the policy changes and typical cases in the pharmaceutical industry since 2022, we summarize the tax risks and put forward targeted tax compliance suggestions and tax risk control and response strategies to help the healthy development of pharmaceutical enterprises.

Nov. 22, 2023, 8:11 p.m.

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Recycling Industry Tax Compliance Report (2023)

For a long time, due to the special nature of the recycling business of the renewable resources industry, the VAT input of the procurement process of renewable resources enterprises has been seriously insufficient, and in order to make up for the shortfall in input, some enterprises have obtained VAT invoices by changing their business model, third-party issuance or even purchase. As the special action of "Fighting Frauds and Crooks" has gradually deepened and turned into a regularized crackdown, a large number of cases of false VAT invoices have broken out in the renewable resources industry, and most of the enterprises and their persons-in-charge have been involved in administrative or even criminal liabilities. Under such circumstances, many enterprises have no choice but to give up obtaining input invoices and choose to use homemade vouchers for pre-tax deduction of enterprise income tax, while at the level of value-added tax (VAT), they pay VAT in full according to the sales amount when selling goods to the downstream, which greatly compresses the profit margins of enterprises.2021 On December 30, 2012, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued the Announcement of the Policy of Improving the Value-added Tax for Comprehensive Utilization of Resources (Announcement of MOF and SAT). On December 30, 2021, the Ministry of Finance and the State Administration of Taxation jointly issued the Announcement on Improving VAT Policies for Comprehensive Utilization of Resources (Ministry of Finance and the State Administration of Taxation Announcement No. 40 of 2021), in which the provisions on the sales of renewable resources by general taxpayers can choose the simplified tax method to calculate and pay the VAT according to the 3% levy rate have greatly alleviated the problem of VAT burden in the recycling business. At the same time, in the process of handling criminal cases of false invoicing of renewable resources enterprises in the past two years, practical cases of the crime of illegal purchase of VAT invoices have appeared, and at the same time, with the reform of criminal compliance mechanism of the procuratorate system being comprehensively pushed forward in the country, the compliance of non-prosecution is also fairly utilized in the tax-related criminal cases of the renewable resources industry, and the above changes have brought a new opportunity for the defense of the tax-related criminal cases of the renewable resources industry. The above changes have brought new opportunities for the defense of tax-related criminal cases in the renewable resources industry. Based on this, in order to enable the majority of enterprises in the renewable resources industry to carry out tax management in compliance and legally, strengthen internal risk prevention and control and external risk isolation, and effectively cope with and resolve tax-related legal risks in their future operation, Huatax has combined the continuous research of the renewable resources industry and the experience of representing the latest tax-related cases to prepare this report, which provides information on the tax environment of the renewable resources industry under the new situation of tax levy and administration, causes of the tax risks, the main tax risks and their manifestations, the tax risks and the forms of fraudulent prosecution, the tax-related criminal cases, and the tax-related criminal cases in the renewable resources industry. This report provides in-depth analysis on the tax environment of renewable resources industry under the new situation of tax administration, causes of tax-related risks, major tax-related risks and their manifestations, points of contention and defense in criminal cases of fraudulent invoicing, and tax compliance management, etc., with a view to providing useful references and reference for the enterprises of renewable resources industry.

Nov. 22, 2023, 6:29 p.m.

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High-Income Individuals Tax-Related Risk Report (2022)

Since the implementation of the new individual income tax system in 1994, tax authorities at all levels throughout the country, in compliance with the instructions of the leaders of the CPC Central Committee and the State Council on improving and strengthening the administration of individual income tax collection, have always made the regulation of high incomes and the alleviation of the contradiction of inequitable distribution of income in the society as the key point of the work of collecting and managing individual income tax, and have taken a variety of measures to intensify the efforts of collecting and managing individual income tax on high-income industries and individuals. However, there is no relevant document to determine the basis for the division of high-income and high net worth taxpayers.
According to the data statistics of China Private Wealth Report 2021 jointly released by China Merchants Bank and Bain, the number of high-net-worth individuals (with investable assets of more than $10 million) in mainland China was 2.62 million by the end of 2020, with a compound annual growth rate of 15% from 2018 to 2020, and is expected to reach 2.96 million by the end of 2021. By the end of 2020, the per capita investable assets held by China's HNWIs will be approximately 32.09 million yuan, with a total of 84 trillion yuan of investable assets; it is expected that by the end of 2021, the size of the investable assets held by China's HNWIs will reach approximately 96 trillion yuan.
Along with the rapid growth in the number of high-income people in Mainland China, there is an increasing demand for high-income people to save tax through tax planning. Correspondingly, tax authorities around the world have tightened up the collection and management of personal income tax, and there are frequent cases of high-income earners being recognized as tax evaders or having their taxes adjusted.
This report is compiled based on Huatax's analysis and research on the tax administration policies of high-income groups, combined with the typical tax-related cases of high-income groups in which Huatax has participated in recent years, with the aim of revealing the major tax risk points of high-income groups both inside and outside the country from the perspective of the characteristics of the tax administration of high-income groups and putting forward targeted compliance suggestions on this basis, with a view to providing guidance and reference for the tax compliance of high-income groups.
It should be noted that the term "high-income group" in this report refers to high-income taxpayers in Mainland China in a broad sense, including high-income groups (e.g., those with income of more than RMB 10 million) and high-net-worth groups (e.g., those with investable assets of more than RMB 10 million).

Nov. 26, 2023, 1:57 a.m.

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Internet Platform Tax-Related Criminal Risk Report (2022)

The combination of the Internet and real industries is a trend in the era of digital economy. Relying on the Internet's features of security, high-speed, real-time, transparency and traceability, a large number of traditional industries have been revitalized, especially during the special period affected by the new coronavirus epidemic. For example, logistics as a traditional industry and the integration of the Internet gave birth to the network freight, as a new industry for the realization of the logistics industry as a whole to reduce costs and increase efficiency has made an important contribution, even under the impact of the epidemic is still to promote China's realization of the total amount of social logistics of nearly 300 trillion yuan, reigning as the world's first. Another example, in the industrial restructuring and the epidemic spawned, flexible employment has become one of the hotspots of the current market concern. According to a third-party research organization, flexible labor has just been born, and its market size will reach 648 billion in 2020 and over 870 billion in 2021. In the huge market prospects and national policy support, China's more than 300 logistics enterprises to complete the network platform online service capacity identification, more than a hundred more than to obtain a network freight license for the integration of social dispersion of capacity, enhance the norms of freight transport, protection of drivers, owners of legal rights to play an important role; at the same time, China has also emerged in hundreds of flexible labor platform, the Internet tax agent platform, for the employment needs of the At the same time, hundreds of flexible labor platforms and Internet tax agent platforms have emerged in China to provide flexible labor and tax optimization solutions for enterprises with labor needs. However, in the early stage of operation, the national industry laws and regulations are not perfect and supervision is not in place, some enterprises in the three major Internet platforms fail to grasp the scale and boundary of legal operation, or in order to expand their business, there are irregular operations, or for the sake of momentary interests and engage in illegal behaviors, which leads to criminal risks related to taxation, not only subjecting themselves to economic penalties and personal freedom penalties, but also affecting the sustainable and healthy development of the whole industry in the country. In 2021, the three major Internet platforms all broke out with major tax-related cases and important cases, although the number is not large, but the wave and its downstream customers are in thousands and the scope is very wide, which centrally reflects the weak links in the business and tax treatment of enterprises, and also reflects the higher requirements put forward by the national regulatory authorities on the compliance of enterprises. In order to better prevent tax-related risks and resolve tax-related problems, Huatax team has combined the new development and characteristics of tax-related cases on the three major Internet platforms and the specific provisions of China's tax law and criminal law to form this special report, which will help the enterprises to operate in a lawful and compliant manner, and at the same time to make professional and effective responses when dealing with tax-related cases.

Nov. 26, 2023, 2:12 a.m.

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Coal Industry Tax-Related Criminal Risk Report (2022)

As the basic energy of China's national economy, coal has important strategic significance. Due to the special nature of coal resources, the state's management of the coal industry has a large degree of administrative dominance, the voice of coal enterprises of different natures in the industry chain is light and heavy, private coal enterprises are not standardized, management is not perfect, risk control is not sufficient, and many other reasons, so that the private coal enterprises are more likely to be involved in tax-related risks and criminal risks.
February 28, 2020, Inner Mongolia to carry out special rectification in the field of coal reverse 20 years of action, followed by a number of other provinces, including Shanxi, Yunnan, Sichuan, Xinjiang and other provinces have also launched the coal field of self-examination and self-correction. Multi-departmental coordination has led to the investigation and prosecution of a number of cases of tax violations by coal enterprises, which has led to further fermentation of tax-related and criminal risks of coal enterprises.
In March 2021, the Opinions on Further Deepening the Reform of Tax Levy and Administration issued by the Central and State Offices explicitly regarded coal and other industries as a key area of concern, and severely cracked down on illegal and criminal behaviors of false invoicing, tax cheating and tax evasion in coal and other industries, and the SAT made it clear that the SAT would be guided by tax risks, make full use of big data, accurately implement tax supervision, focus on key areas, and focus on investigating and dealing with tax-related illegal behaviors such as false and fraudulent invoices to cheat tax and concealment of income to evade tax. income tax evasion and other tax-related illegal behaviors, making the tax-related and criminal risks of coal enterprises the focus of attention and crackdown.
In October 2021, the fight against the three counterfeits was taken to a higher level, the Supreme Prosecutor and OFAC joined in, the four ministries were upgraded to six departments, the special action was upgraded to a regularized crackdown, the departments shared data and worked jointly to crack down on all kinds of false invoicing and tax fraud and related enterprises, and the tax and police jointly investigated and dealt with a number of big cases of false invoicing and tax fraud in the coal field, so that the tax-related criminal risks of the coal enterprises were triggered at the first instance.
Tax-related criminal cases have a low threshold of incrimination and heavy criminal liability, and entrepreneurs will be put behind bars if they are not careful. The tax-related criminal risk belongs to the "sword of Damocles" hanging over the heads of coal enterprises and entrepreneurs. But for the practice of coal enterprises outbreak of tax-related criminal cases, the facts of the case are not the same, some are the use of coal enterprises in the name of violent false tax fraud, some are enterprises in the process of operation there are management loopholes and by the staff fraud, customer fraud, some are the existence of imperfections in the management system of the enterprise and thus triggered the risk of tax-related, some based on the special nature of the coal industry, such as the truth on behalf of the opening, the business of the affiliation for the existence of these circumstances and was filed for criminal responsibility, and the case of the criminal liability. For enterprises and entrepreneurs who have been prosecuted for criminal liability due to these circumstances, special attention should be paid to avoiding tax-related criminal liability as far as possible by combining the provisions of tax law and criminal law.
The Report on Tax-Related Criminal Risks in Coal Industry (2022) is a summary of Huazhan's in-depth observation of the coal industry and its successful experience in representing coal enterprises in tax-related criminal cases, aiming at sorting out the latest tax policies in the coal industry, analyzing the tax-related criminal risks of coal enterprises in the judicial practice, and putting forward targeted response suggestions, with the aim of providing reference for coal enterprises to maximize the prevention of tax-related criminal risks.

Nov. 26, 2023, 2:51 a.m.

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Petrochemical Industry Tax-Related Criminal Risk Report (2022)

The petrochemical industry is one of the important economic pillars of China. Since the Golden Tax Phase III went online in 2015, the tax and judicial departments have made unprecedented efforts to investigate and deal with petrochemical enterprises' evasion of consumption tax by means of variable invoicing, and the criminal cases of variable invoicing and false invoicing in the petrochemical industry have erupted on a large scale across the country.At the beginning of 2018, the State Administration of Taxation (SAT) issued the "Announcement on the Relevant Issues on the Administration of the Levy and Collection of Consumption Tax on Refined Products Oil," and set up a module of refined products oil invoicing on the Golden Tax Phase III system, so as to eliminate the traditional Illegal invoice-changing behavior has been completely eliminated, but new types of invoice-changing transactions driven by consumption tax interests still continue to emerge, and various types of invoice-changing cases, such as industrial white oil, outsourced processing, and gasoline-to-transportation, driven by value-added tax interests, have shown regional and cyclical outbreaks. The criminal risk of false VAT invoicing by petrochemical enterprises remains severe. Based on the data analysis of criminal cases of false invoicing in petrochemical enterprises and the background observation of the normalized mechanism of the national action against "three counterfeits", this report analyzes the potential tax-related criminal risks of traditional and new types of invoice-variation transaction modes of petrochemical enterprises and combines with the analysis of the successful defense cases of Huazhong Tax Lawyers' team to provide guidance and reference for petrochemical enterprises on the tax-related criminal compliance for the year of 2022. The team also analyzed the successful defense cases and provided guidance and reference for petrochemical enterprises on tax-related criminal compliance in 2022.

Nov. 26, 2023, 2:37 a.m.

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Foreign Trade Industry Tax-Related Criminal Risk Report (2022)

The year 2021 is the opening year of China's "Fourteenth Five-Year Plan". In the face of the severe impact brought about by the global epidemic of Crown Pneumonia, China's foreign trade import and export has demonstrated strong resilience, and has delivered an eye-catching report card in the face of many difficulties and challenges: according to customs statistics, the total value of China's import and export of trade in goods in 2021 will reach RMB 39.1 trillion yuan, an increase of 21.4% compared with that of 2020. Among them, exports were 21.73 trillion yuan, up 21.2%; imports were 17.37 trillion yuan, up 21.5%. Compared with 2019, China's foreign trade exports and imports increased by 26.1% and 21.2% respectively. What particularly introduces attention is that in 2021, the scale of China's imports and exports reached 6.05 trillion U.S. dollars in U.S. dollar terms, eight years after it first reached 4 trillion U.S. dollars in 2013, and crossed two steps of 5 trillion and 6 trillion U.S. dollars within the year to reach a historical high point.

Nov. 26, 2023, 2:44 a.m.

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Pharmaceutical Industry Tax-Related Criminal Risk Report (2022)

The pharmaceutical industry is an important part of China's national economy. In recent years, the "4+7" centralized purchasing with quantity, "two-ticket system" and other reform measures continue to land, the pharmaceutical industry in the past multi-level distribution model collapsed, a large number of pharmaceutical sales companies transformed into CSO, CSP, CMO, CRO outsourcing service providers. However, subject to the established mode of product sales and benefit distribution, the problem of commercial bribery in the pharmaceutical industry is serious, and the emergence of new types of business provides new possibilities for profit arbitrage. The pharmaceutical industry presents the phenomenon of coexistence of false driving and commercial bribery, and false driving and bribery cases are implicated in each other. The complexity of tax-related criminal cases superimposed on the special background of the pharmaceutical industry highlights the importance of tax-related risk management and control in the pharmaceutical industry, and invoice management compliance remains the keyword for pharmaceutical enterprises to avoid criminal risk liability in 2022.
This report is compiled based on Huatax's in-depth observation of the pharmaceutical industry and profound summary of its experience in representing pharmaceutical enterprises in tax-related criminal cases in recent years, aiming to reveal the causes and characteristics of tax-related criminal risks in the pharmaceutical industry as well as the direction of the investigation and trial of the cases in 2022, and based on which, it puts forward targeted defense strategies and compliance suggestions with a view to providing references for the pharmaceutical enterprises in avoiding criminal risks and realizing their operation in compliance with the law.

Nov. 26, 2023, 2:26 a.m.

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