<\/p>\n
The \u201cInterpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases Endangering Tax Revenue Administration\u201d (\u201cthe Interpretation<\/strong>\u201d), jointly issued by the Judicial Committee of the Supreme People\u2019s Court and the Procuratorial Committee of the Supreme People\u2019s Procuratorate, came into effect on March 20th<\/sup>, 2024. The Interpretation clarifies the provisions applicable to Offenses Against Tax Collection and Management that are stated under Section 6, Chapter III,\u00a0 Part II of the Criminal Law of the People\u2019s Republic of China. It also effectively repeals the previously issued interpretations with the same scope.<\/p>\n In this brief overview, we will focus on the key highlights of the Interpretation to deepen understanding and raise awareness on this new interpretation.<\/p>\n Firstly, the Interpretation provides specific examples of behaviors that are identified as false tax declaration by \u201ccheating or concealment\u201d, including concealment of income or assets by signing \u00ab\u00a0yin-yang contracts\u00a0\u00bb also called \u201ctwin contracts\u201d. This refers to two documents being produced for the same agreement. One expresses the parties\u2019 true intentions, while the other, with a lower sum to minimize taxation, is presented to tax authorities. It\u2019s the first time that the judicial authorities clearly deem the \u201cyin and yang\u201d contracts as a behavior of tax evasion.<\/p>\n It as well provides specific situations that constitute \u201cfailure to file\u201d and re-emphasizes that withholding agents are submitted to the same sanctions under certain circumstances.<\/p>\n In addition, the interpretation sets the amounts of evaded taxes beyond which imprisonment<\/strong> sentences<\/strong> of varying degree are applicable. For example, \u00a0falsely making out special invoices for value-added\u00a0tax\u00a0or any other invoices to defraud a\u00a0tax\u00a0rebate for exports (article 205 of the Criminal law of China) is punished by an imprisonment between 3 and 10 years if\u00a0the\u00a0amount\u00a0of\u00a0tax\u00a0is not less than CNY 500,000 (\u201crelatively large amount\u201d) and is punished by an imprisonment over 10 or life imprisonment if\u00a0the\u00a0amount\u00a0of\u00a0tax\u00a0is not less than CNY 5,000,000 (\u201clarge amount\u201d) \u00a0\u00a0as stated in article 11 of the judicial interpretation..<\/p>\n It also clarifies which taxes should be included in the notion of \u201camount of evaded tax payment\u201d.<\/p>\n The interpretation specifies that if the taxpayer, as long as he is a first-time offender, pays the tax owed after receiving a recovery notice from tax authorities within the prescribed period, and has been administratively punished, he should not be pursued for criminal responsibility.<\/p>\n Related to this provision, the Interpretation also specifies that taxpayers who evade tax payment shall not be pursued criminally as long as the authorities have not issued a recovery notice in accordance with the law.<\/p>\n The Criminal law has a specific punishment for taxpayers who transfers or conceal property in order to prevent the tax authorities from recovering the owed taxes. The Interpretation specifies behaviors that fall within the scope of this concealment.<\/p>\n <\/p>\n In response to the recent years’ rapid growth of export tax refund fraud, the Interpretation lists circumstances that can be defined as fraudulent means. It also defines the amount and circumstances beyond which punishment is increased.<\/p>\n Interpretation further specifies that in case of attempted fraud, without obtaining the export tax refund, the punishment may be mitigated or reduced according to circumstances.<\/p>\n The Interpretation states circumstances that shall be deemed as issuance of false VAT special invoices or other invoices used for defrauding export tax refunds or offsetting tax payments. It also defines the amount and circumstances beyond which punishment is increased.<\/p>\n <\/p>\n The Interpretation defines the amount and circumstances beyond which fraud can be qualified and\/or beyond which punishment is increased for the following frauds:<\/p>\n <\/p>\n The Interpretation specify that anyone who knowingly provides another person with means of fraud (such as account numbers or credit certificates) despite being aware that the person is committing a crime harmful to tax collection and management shall be treated as an accomplice to the corresponding crime.<\/p>\n <\/p>\n In cases where crimes that harm tax collection and management are committed, if the perpetrator voluntarily repays the taxes, recovers the lost tax revenue, and implements effective compliance rectification, leniency may be granted. In cases where the criminal circumstances are minor and do not warrant criminal punishment, prosecution may be waived, or criminal punishment may be exempted. If the circumstances are significantly minor and do not pose substantial harm, no criminal action shall be taken.<\/p>\n In conclusion, when companies engage in transactions involving tax-related matters, they must pay particular attention and keep in mind this new Interpretation as it gives a more comprehensive framework for addressing offenses against tax collection and management as well as the increased risk of detention\/penalty in case of tax related fraud.<\/p>\n","protected":false},"excerpt":{"rendered":" The \u201cInterpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases Endangering Tax Revenue Administration\u201d (\u201cthe Interpretation\u201d), jointly issued by the Judicial Committee of the Supreme People\u2019s Court and the Procuratorial Committee of the Supreme People\u2019s Procuratorate, came into effect on March 20th, 2024. The Interpretation clarifies the provisions applicable to (…)<\/p>\n","protected":false},"author":41,"featured_media":58162,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"Law interpretation: Criminal tax offenses and penalties increase","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[465],"tags":[],"class_list":{"0":"post-58214","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news-2"},"_links":{"self":[{"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/posts\/58214","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/users\/41"}],"replies":[{"embeddable":true,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/comments?post=58214"}],"version-history":[{"count":0,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/posts\/58214\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/media\/58162"}],"wp:attachment":[{"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/media?parent=58214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/categories?post=58214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.orcom-ca.com.cn\/fr\/wp-json\/wp\/v2\/tags?post=58214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}I. Tax evasion statute<\/strong><\/h2>\n
1\/ Precisions regarding false declaration and failure to file tax returns<\/em><\/strong><\/h4>\n
2\/ Precisions regarding the \u201cfirst offender\u201d provision<\/em><\/strong><\/h4>\n
3\/ Clarifying behaviors recognized as \u201cmeans of transferring or concealing property.\u201d<\/em><\/strong><\/h4>\n
II. State export tax refunds fraud <\/strong><\/h2>\n
1\/ Listing behaviors that can be deemed as false declaration and fraudulent means to defraud the state export tax refunds (204)<\/em><\/strong><\/h4>\n
2\/ Precisions about falsely issuing VAT invoices or other invoices to defraud export tax refunds (205)<\/em><\/strong><\/h4>\n
III. False invoice issuance<\/strong><\/h2>\n
\n
IV. Fraud complicity<\/strong><\/h2>\n
V. Leniency measures<\/strong><\/h2>\n
Conclusion<\/strong><\/h2>\n