Recently, the Inspection Bureau of Putian Municipal Taxation Bureau of the State Administration of Taxation announced the delivery of 39 tax instruments, all of which were for pharmaceutical consulting services, technology companies to pharmaceutical enterprises to falsely issue VAT invoices or ordinary invoices, the published cases present: multiple payees from the same multiple invoicing parties to falsely issue VAT ordinary invoices, and the invoicing parties existed only one year of the establishment of the case that is canceled. The following 16 instruments published in January 2021 are analyzed and used to reveal the risk of false invoicing of consulting service fees by pharmaceutical enterprises.

I. Putian Tax Bureau announced on January 7 and 11 to deliver 16 processing decisions, all related to pharmaceutical enterprises

The 16 tax instruments investigated and dealt with the illegal facts are consulting services, pharmaceutical science and technology companies to the pharmaceutical enterprises false invoicing, involving a total of 26 invoiced parties, of which, Suzhou Yu's Pharmaceutical Co., Ltd. from 12 invoiced parties to obtain false VAT ordinary invoices, Zhejiang Jutai Pharmaceutical Co. VAT ordinary invoices, and the same 7 invoicing parties existed with the aforementioned Suzhou Yu's Pharmaceutical. This announcement of tax instruments in addition to one invoicing enterprise issued invoices for special invoices, the rest of the general invoices, and invoicing tax rate are 3%, dispersed to the tax amount of each tax instrument is relatively low. Previously, Putian City Tax Bureau on December 7 and 23, 2020 has published 23 similar tax instruments, in which the invoiced enterprises also include wholly-owned subsidiaries of large pharmaceutical companies.

II. the transaction mode and new features of false invoicing by pharmaceutical consulting service companies

After the implementation of the two-invoice system, a large number of pharmaceutical consulting services company (refers to no distributor qualification, no drug ownership, only for pharmaceutical companies to provide consulting services to the company, referred to as the CSP company) was incorporated to provide consulting services for pharmaceutical companies, to the pharmaceutical companies to issue invoices, CSP company at the same time registered to set up a number of sole proprietorships, the use of sole proprietorships to enjoy the financial rebates or approved levy policy, the collected service fees to individual sole proprietorship accounts, transferring them to the accounts of pharmaceutical representatives or subcontractors under the name of business subcontracting, etc., and ultimately paying the said commercial rebates to doctors through pharmaceutical representatives.

According to the aforementioned public tax instruments can be seen, in order to avoid the risk of criminal liability for false VAT invoices, the type of invoices issued by the enterprise is mostly general invoices, only for the purpose of realizing cash withdrawals, the docking of the invoicing party is dispersed, and the amount of tax is relatively small, and the different consulting companies specific to invoicing for the same pharmaceutical enterprises have the situation of the same person as the actual controller.

III. the pharmaceutical industry consulting service fee invoices suspected of false opening risk points

(I) no actual business premises, no actual office staff, no cost charges

Field inspection of office space, requiring the provision of office space own property certificates or rental service contracts;

Field verification of whether there are office personnel, requiring the provision of wage payment vouchers and health insurance social security payment vouchers;

The following circumstances will be recognized as no business substance, suspected of false opening: no trace of office, only 1-2 people are responsible for keeping seals, issuing invoices, receiving bank statements, for cancellation, etc., the registered legal representative is not at all the actual operating personnel, the opening of the company without knowledge, for others to register and set up fraudulent identity cards.

(II) the establishment of multiple individual or company, the actual control is the same person

In the outbreak of cases of false invoicing of consulting services by pharmaceutical enterprises, pharmaceutical agencies also have a more common feature, setting up 1-2 pivotal companies with business substance - brand management companies or consulting services companies, while looking for tax depressions in the province, setting up multiple individual sole proprietorships or small-sized taxpayers, according to the supplier, hospitals/pharmacies' supply and demand of goods and invoices, the established pivotal company is responsible for scheduling, statistics, and comprehensive estimation of tax burden and invoicing amount (whether or not individual sole proprietorship enterprises or small-scale taxpayers have an annual sales quota), and this pivotal company has actual operation, office space and employees, and numerous individual sole proprietorships or small-scale taxpayers have the same office space, only titular legal persons and no employees.

(III) Pharmaceutical enterprises do not conduct acceptance of services, and the consulting service contract in question uses a form contract.

Inspection methods: whether the contract is a template downloaded from a website, etc., whether the contract items are matched according to the invoice amount, product name and other elements, pharmaceutical enterprises do not account for the substance of the consulting services, and the actual income settlement is based on the sales volume of the drugs, which is not related to the content of the services.

CSPs and individual enterprises are required to explain what specific consulting services, conference services, marketing services, and advertising services are provided to pharmaceutical companies; investigate the specific business processes of the above services, and the actual business person in charge of each process, including the person in charge's identity card number, contact information, and the manner of his or her employment in the company.

Conclusion: the agreement on service fees is linked to product sales, pharmaceutical companies do not verify the authenticity of the service, pharmaceutical companies do not carry out any form of acceptance of specific services, only the CSP company to provide the appropriate information.

(IV) Pharmaceutical companies → pharmaceutical consulting service companies → pharmaceutical representatives (individual) → doctors of the flow of funds

Inspection method: Access to the company, associated personal bank accounts, tracking the flow of funds from the pharmaceutical factory, based on the invoice to calculate the transaction links involved in the invoice corresponding to the financial transactions, and projected "invoicing fees" and so on.

Concern: In the above transaction mode, there is no "return flow of funds", but the case-handling authorities combined with the aforementioned investigation of the authenticity of the consulting services business, and ultimately inquired about the direction of the funds, part of the pharmaceutical enterprises in the case of false invoicing, the case-handling authorities may have records of the "prescription fee" formulated to the pharmaceutical enterprises, pharmaceutical representatives of journal entries, such as the "invoicing fee". Fee" and other diary entries and other evidence, thus implicating non-state staff bribery cases.

(V) The invoicing is determined by the pivotal company based on the establishment of numerous consulting service companies or whether the individual has a sales quota, and the consulting service company has a single target for invoicing, which is only for a certain pharmaceutical company.

We are concerned that the inquiry letters related to the listing of pharmaceutical companies are also very concerned about the authenticity of the promotional services business of pharmaceutical companies: (1) the selection criteria and management mode of the promotional service provider, (2) the basic information of the promotional service provider, including the name, time of establishment, the scope of the main business, the actual controllers and executives, the time of the start of cooperation with the issuer, and whether there is a related relationship with the issuer and its directors, supervisors and senior management; (3) the promotional service provider's basic information, including the name, time of establishment, the scope of main business, actual controllers and senior management (3) whether the promotion service provider has only provided services for the issuer; (4) the basis for determining the billing price of the issuer's promotion service fee, whether the invoices for the promotion service fee obtained are legally compliant, and whether there is any transfer of benefits.

IV. Administrative and Criminal Offense Liability for False VAT General Invoice Should Draw Attention of Pharmaceutical Enterprises

(I) The number of cases of false invoicing crime has increased, and sales personnel are facing the risk of being recognized as individual criminals.

Through the analysis of the retrieved cases, it is found that the names of false general invoices issued by pharmaceutical enterprises are complicated, and in order to realize the purpose of listing more costs and expenses, pharmaceutical enterprises, through various types of companies, allow others to falsely issue invoices of various names such as renovation fee, design fee, advertising fee, moving fee, computer consumables, etc. for themselves. We draw the attention of the enterprise's sales staff, false invoicing if the company has a perfect reimbursement system, the audit of the invoice has been done to pay full attention to the obligations of the sales staff due to the pressure of the cost of expensing false invoicing behavior, may be recognized as a personal crime. Due to the low starting point and heavy criminal liability of false VAT invoices, many pharmaceutical enterprises, in order to avoid the risk, issue ordinary VAT invoices through a number of individual or small-scale taxpayers in order to reduce the risk of criminal liability. The results of the search of the referee network for the crime of false invoicing by pharmaceutical enterprises also showed that the number of cases of the crime of false invoicing by pharmaceutical enterprises was on a significant upward trend after the full implementation of the two-invoice system in 2017.

(II) Lack of clear provisions on the "particularly serious circumstances" of fraudulent invoicing, and huge differences in judgments across the country.

One of the provisions of Article 205 of the Criminal Law, the crime of fraudulent invoicing has two sentencing levels: first, if the circumstances are serious, the penalty shall be fixed-term imprisonment of less than two years, detention or control, and a fine; second, if the circumstances are particularly serious, the penalty shall be fixed-term imprisonment of more than two years and less than seven years, and a fine. The Supreme People's Procuratorate Ministry of Public Security on the jurisdiction of the public security organs of the criminal case prosecution standard provisions (II) of the supplementary provisions of the (public pass word [2011] 47) No. false invoices more than one hundred or false amount of more than 400,000 yuan shall be filed for prosecution, but for the circumstances of the particularly serious standard and no relevant judicial interpretation to make clear provisions, and by the judge in the hearing of the case of the However, there is no judicial interpretation on the standard of particularly serious circumstances, and it is up to the judge to rationally grasp the process of hearing cases. Different courts are not consistent in their determination of "particularly serious circumstances" for the crime of fraudulent invoicing.

We randomly searched 24 cases of fraudulent invoicing, and the total amount of value and tax of the fraudulent invoices ranged from 640,000 to more than 18 million dollars, with no clear threshold for "particularly serious circumstances". When the court determines whether the circumstances are "particularly serious", it combines the number of false invoices and the multiples of the amount of false invoices compared with 400,000 to determine, for example, the Intermediate People's Court of Enshi Tujia and Miao Autonomous Prefecture in Hubei Province (2019) E28 Criminal Final No. 48: the amount of false invoices was 16,319,393,780 yuan, and the amount of false invoices was 16,319,938,000 yuan. Compared with the incriminating amount standard of RMB400,000 for the "serious" circumstance of false invoicing, although the relevant laws do not specify the amount of the aggravating circumstances, the amount of false invoicing in this case exceeded the incriminating standard by more than 400 times, and therefore the aggravating circumstance should be applied to recognize it as a "particularly serious circumstance". ", the defendant wang moumou should be in "two years or more than seven years imprisonment, and a fine" within the range of the penalty. In the case of Qian Moumou false invoicing, the amount of 4.41 million, the court found that belongs to the "circumstances are particularly serious", and in Zibo City, Zhangdian District Zhang Moumou false invoicing case, the amount of false invoicing totaled 5.99 million, the court found that belongs to the "circumstances are serious".

Tip: enterprises or individuals due to fraudulent invoicing is held criminally liable, should be submitted to the same region, the same type of cases in favor of the verdict, and the court actively communicate.