In recent years, China's export trade volume continues to grow, with the annual export of goods reaching as high as 23.97 trillion yuan in 2022, an increase of 10.5%; export tax refunds totaling 186.78 billion yuan were handled throughout the year. However, prior to this year, engaging in foreign trade was subject to the filing of foreign trade operators, so some small and medium-sized enterprises (SMEs) and individual households were unable to carry out export business. To encourage the development of the foreign trade industry, the Standing Committee of the National People's Congress (NPC) abolished this filing at the end of 2022, further relaxing the threshold for participation in foreign trade. In addition, the State Administration of Taxation (SAT) issued several announcements during 2022 to continuously accelerate export tax refunds. The potential risk of fraudulent export tax refunds is a cause for concern as a result of the two factors, namely the number of market participants becoming larger and the relaxation of tax refund audits. In addition, due to the complexity of export business and tax refund, the business of entrusting agents to export and handling tax refund has a good prospect, which expands a broad market for the foreign trade comprehensive service platform (hereinafter referred to as "foreign comprehensive service"). In view of this, this paper combines the current provisions of the micro and small enterprises to carry out foreign trade exports and tax concessions to be introduced to the main points of compliance, and at the same time, the foreign comprehensive service platform how to prevent the risk of tax refunds to be interpreted.

Ⅰ. the abolition of the foreign trade operator record, export trade opportunities and risks coexist

(Ⅰ) Policy trends: reduce the threshold of export trade, accelerate the progress of tax rebate approval

First of all, on December 30, 2022, the Standing Committee of the National People's Congress amended the Foreign Trade Law, deleting the original Article 9 on the registration of foreign trade operators for the record. In this way, since December 30, 2022 all market entities in the country automatically obtain the right to operate foreign trade, in addition to the state explicitly restricts the import and export of goods, import and export links licenses and a series of qualifications canceled.

This is of great significance for the export tax rebate link. The export enterprises stipulated in the Circular of the Ministry of Finance and the State Administration of Taxation on the Policies of Value-added Tax and Consumption Tax on Exported Goods and Services (Cai Shui [2012] No. 39, hereinafter referred to as No. 39 of 2012) refer to the "units or individual industrial and commercial households that handle industrial and commercial registration, tax registration, and the filing of registration of foreign trade operators according to law and export the goods on self-supporting or entrusting basis, as well as those that have been granted the right of foreign trade operation. Manufacturing enterprises that have legally organized industrial and commercial registration, tax registration, but have not registered as foreign trade operators for the record, and entrusted the export of goods." According to the provisions of the trade enterprises must obtain the foreign trade operators record registration, in order to carry out self-export or commissioned exports, without obtaining the record registration shall not be exported, and shall not apply for export tax rebates. In practice, this has given rise to the business of "fake self-supporting and real agency".

Secondly, on April 20, 2022, the State Administration of Taxation (SAT) and other ten ministries and commissions jointly issued the Circular on Further Increasing Support for Export Tax Refunds and Promoting the Stable Development of Foreign Trade, which kicked off the prelude to the speeding up of export tax refunds. The State Administration of Taxation (SAT) Announcement on Matters Relating to Further Facilitating the Handling of Export Tax Refunds and Promoting the Stable Development of Foreign Trade (SAT Announcement No. 9 of 2022) put forward policies such as "tolerating shortcomings in handling" for on-site verifications and reduction of information submission, which reduced the number of links and formalities for tax refunds.

Subsequently, the State Administration of Taxation (SAT) issued a number of announcements to speed up the time of tax refund audit, and on June 14, 2022, the State Administration of Taxation (SAT) "Notice on the Stage to Speed up the Progress of Export Tax Refund Processing" (Taxation General Goods and Labor Letter 〔2022〕 No. 83), even more so, requested that the average time for the normal export refund (exemption) of the first-type and the second-type exporters be compressed to within 3 working days.

(Ⅱ) Shenzhen penalized three enterprises one after another, all of which were using the export platform to obtain tax refunds fraudulently

According to the information disclosed by the Shenzhen Tax Bureau of the State Administration of Taxation, three enterprises were fined for tax fraud with the help of an external integrated service platform. The patterns of their violations were similar, all of which were issuing VAT special invoices that did not match the actual business situation, and using export platform companies to cheat export tax refunds. Among them, Shenzhen A Technology Co., Ltd. was fined one times RMB 3,866,627,716; a Guangdong Electronic Technology Co., Ltd. was fined one times RMB 4,414,695,697; and a Shenzhen Industrial Co., Ltd. was fined one times RMB 582,289,767.

(Ⅲ) Increased Export Demand of Micro, Small and Medium-sized Enterprises, Tax Refund Risks Require Urgent Attention

With the prosperity of export tax rebate business, a large number of small and medium-sized micro-enterprises and individual entrepreneurs have the demand for exporting foreign exchange, but due to the complexity of the export business and application for export tax rebate links, it is difficult for these units to grasp, and they can only export through the foreign comprehensive service enterprises or foreign trade enterprises engaged in the export business all year round as agents. However, this model has a greater risk. As the export tax rebate needs to verify the production and trade of goods in the territory to ensure that the goods in the territory of the tax, the goods of the input invoice strict audit, if these small-scale units to obtain the input invoice is problematic, they are caught in the risk of tax fraud not to mention that it will also involve the external comprehensive service and foreign trade enterprises acting as an agent for export. For this reason, we combine the existing policy, the risk and mode to be analyzed.

Ⅱ. how to carry out compliance with foreign trade in small and medium-sized enterprises and individual households?

(Ⅰ) Utilizing the cross-border e-commerce retail policy of export tax exemption for exports

The cross-border e-commerce policy is an emerging foreign trade pattern since 2014, which refers to the policy that enterprises exporting goods through e-commerce sales platforms can enjoy tax refund (exemption). Among them, a simpler VAT exemption policy has been implemented for retail export business, which is common among micro, small and medium-sized enterprises (MSMEs).

According to Articles 2-6 of the Circular of the Ministry of Finance and the State Administration of Taxation on Taxation Policies for Cross-border E-commerce Retail Exports (Cai Shui [2013] No. 96), enterprises carrying out cross-border e-commerce retail business can enjoy tax exemption policies if they meet the following conditions:

(1) The enterprise has applied for tax registration.

(2) The customs declaration of exported goods has been obtained.

(3) The exported goods have legal and valid proof of purchase, i.e. invoice.

In practice, some small and micro-enterprises and self-employed persons may lack invoices and other documents when they purchase goods. For this reason, the state has implemented the policy of tax exemption for export without invoice in specific regions. These regions are called comprehensive pilot zones for cross-border e-commerce, for example, Zhejiang Obligation. E-commerce in the comprehensive pilot area, as long as the local "e-commerce online integrated service platform" registration, and fill in the goods information, for export, you can enjoy the tax-free policy, more quickly and conveniently, but also can be exempted from the tax rebate of the inconvenience of many things.

(Ⅱ) with the help of foreign trade comprehensive service platform, other foreign trade enterprises commissioned exports

With the abolition of the foreign trade operators record registration system, now all production enterprises and trading enterprises can carry out self-managed exports or commissioned exports, not subject to the restrictions set out in Article 1 of Document 39 of 2012. However, there are some differences when carrying out entrusted exports.

Production enterprises or trading enterprises entrusted foreign trade enterprises to act as agents for export, the foreign trade enterprises to handle the formalities of the export process. After carrying out the export, the entrusted party, i.e. the foreign trade enterprise, applies to the competent tax authorities for the issuance of the Certificate of Acting as Agent for Exporting Goods in accordance with Article 10 of the Announcement of the State Administration of Taxation on the Issuance of the Measures for the Administration of Value-added Tax and Consumption Tax on Exported Goods and Labor Services (Announcement of the State Administration of Taxation No. 24 of 2012) from the date of the goods being declared for export to the date of the 15th of April of the following year and transfers the same to the entrusted party in a timely manner After obtaining the certificate, the entrusted party can apply to the competent tax authority for the issuance of the Certificate of Agent Exporting Goods and forward it to the entrusted party in time. After obtaining the certificate, the entrusted party can apply to the competent tax authorities for tax refund.

If the trading enterprise entrusts the foreign comprehensive service platform to act as an agent for export, the foreign comprehensive service shall also apply for the issuance of the Certificate for Acting as an Agent for Exporting Goods and the trading enterprise shall apply for tax refund. However, according to Article 5 of the Announcement of the State Administration of Taxation on Further Optimizing the Management of Tax Refund (Exemption) for Exported Goods of Foreign Trade Comprehensive Service Enterprises (Announcement of the State Administration of Taxation No. 61 of 2016), if the external comprehensive service is entrusted by SMEs to export goods by their agents, the external comprehensive service can apply for an electronic version of Proof of Acting as an Agent for Exporting Goods, which will be pushed directly to the tax authorities of the entrusted party, so as to speed up the tax refund process of the Processing.

If the enterprise is a production enterprise, the tax refund can be directly handled by the foreign comprehensive service enterprise, without the need for the exporting enterprise to apply for tax refund again. However, the production enterprise must meet the following conditions in accordance with the relevant provisions of the Announcement of the State Administration of Taxation on the Adjustment and Improvement of Matters Relating to the Handling of Tax Refunds (Exemptions) for Exported Goods by Foreign Trade Comprehensive Service Enterprises (Announcement of the State Administration of Taxation No. 35 of 2017):

1、Be a general taxpayer and handle the filing of export tax refund (exemption);

2、 provide the competent tax authorities with the account bank and account number for tax refund.

In practice, some production enterprises do not meet the above requirements, and then asked the foreign comprehensive service to "false self-management" form of export.

(Ⅲ) vigilance and prevention of "fake self-management, real agent" and other risk patterns

"Fake self-management, real agent" refers to the export enterprises to accept the commission, export in the name of self-management, declare the tax rebate, but in essence did not participate in the export transaction activities, only to collect part of the agency service fee business behavior. The situation of "fake self-management and real agency" is expressly prohibited by the tax law, and No. 39 of 2012 stipulates four types of "fake self-management and real agency" behavior. 

In case of the above behaviors, the company shall not apply for export tax rebate, but shall treat it as domestic sales and collect VAT and consumption tax. The reason why the "fake self-management, real agent" mode is prohibited is because of the risk of tax fraud. That is to say, the real exporter who carries out this kind of business does not want the tax authorities to know that it is his/her own export, so it is very likely that the real exporter has the risk of tax fraud, but he/she takes advantage of the good tax credit rating of the foreign trade enterprise in order to evade the supervision of the tax authorities. Therefore, foreign trade enterprises and foreign comprehensive services should choose partners carefully, strengthen the audit and supervision of the transaction, and avoid being involved in this non-compliance mode.

Ⅲ. the new situation of foreign trade integrated service platform risk interpretation

(Ⅰ) in order to take orders, in the name of self-employment export tax rebates "desperate"

According to the "Announcement of the State Administration of Taxation on Further Optimizing the Management of Tax Refund (Exemption) for Exported Goods by Foreign Trade Comprehensive Service Enterprises" (SAT Announcement No. 61 of 2016) and the "Announcement of the State Administration of Taxation on Adjusting and Improving Matters Relating to the Handling of Tax Refund (Exemption) for Exported Goods by Foreign Trade Comprehensive Service Enterprises" (SAT Announcement No. 35 of 2017), the state encourages the foreign comprehensive service enterprises to conduct business in the form of entrusted export. If the business is conducted in the way of entrusted export, the risk of tax fraud of foreign integrated services can be isolated:

1、 the trading enterprise has to apply for tax refund on its own, which has nothing to do with the external comprehensive service.

2、 although the production enterprise can apply for tax refund on behalf of the enterprise, the provisions of Article 19 of Announcement No. 35 of 2017, "If the export business of tax refund on behalf of the enterprise occurs in the event of fraudulent export tax refunds and other tax-related violations, the production enterprise shall be held legally liable as the responsible subject." It clarifies the responsibility of tax fraud between the production enterprise and the external comprehensive service.

However, as the production enterprise handles the tax refund on behalf of the enterprise through the external comprehensive service, it needs to fulfill the procedures of opening a tax refund bank account and filing with the tax bureau. It is also more complicated for trading enterprises to apply for tax refund on their own. In addition, there are some enterprises may have business non-compliance, or suspected of tax fraud and other reasons, to share the tax rebate as the "bait", requesting the external comprehensive service to export in the name of self-management, some of the external comprehensive service enterprises due to internal control is not sound, or out of interest considerations, and then the implementation of the "fake self-management, the real agency Some enterprises of external comprehensive services, due to unsound internal control or out of interest considerations, implemented "fake self-management, real agent" export.

(Ⅱ) the agency tax rebate internal control and audit is not strict, repeated cases of tax fraud

Foreign comprehensive service for the production enterprise tax rebate, although it can isolate the risk of tax fraud, but not completely "safe and sound, there are still some risks.

1、 the risk of being suspended on behalf of the tax refund authority

Article 18 of Announcement No. 35 of 2017 stipulates that "if the tax refund amount of the comprehensive service enterprise recognized as fraudulent export tax refund accounted for more than 5% of the declared tax refund amount within 12 consecutive months, it shall not be engaged in the tax refund business in accordance with the provisions of this announcement within 36 months." It can be seen that the current policy sets strict audit obligations for the foreign comprehensive service, which pushes the foreign comprehensive service to review the authenticity and legitimacy of the business of the production enterprise.

2、If there is an act of helping tax fraud, it can still be penalized

Article 19 of Announcement No. 35 of 2017 stipulates that administrative penalties shall be imposed if "the comprehensive service enterprise illegally provides bank accounts, invoices, certificates or other convenience, leading to the occurrence of fraudulent export tax refunds". The penalty is based on Article 93 and Article 98 of the Implementation Rules of the Tax Collection and Administration Law, specifically:

3、If it constitutes an aiding and abetting offender of tax fraud, it still has criminal risk

(Ⅲ) IMCs are utilized by export enterprises to provide convenience for tax fraud

In the link of acting as an agent for export, the foreign comprehensive service needs to strictly audit the qualification and ability of the export enterprise to avoid tax fraud. However, the foreign comprehensive service enterprises after all is a private enterprise, the audit ability is not sufficient, if the enterprise exists in the input "ticket goods separation" and other input false opening problems, it is difficult to verify the foreign comprehensive service, and ultimately be utilized to obtain fraudulent export tax rebates. At this time, although the comprehensive service enterprises do not have the intention of tax fraud, is not to help tax fraud, but will also face the suspension of the right to act on behalf of tax refunds and other penalties.

Ⅳ. Compliance Countermeasures in the Field of Foreign Trade Exports

(Ⅰ) Familiarize with and master the export tax rebate policy, and actively apply the tax exemption preferences

The export tax rebate policy is a complex policy that requires in-depth study and understanding. Enterprises should carefully study the national policies and regulations on export tax rebate, and understand the difference between self-managed and agency export, as well as the relevant regulations and procedures for export tax rebate. In the process of tax rebate, enterprises should improve their internal management, establish standardized operating procedures for export tax rebate and internal audit system, and ensure that all aspects of tax rebate application, audit and submission meet the requirements of policies and regulations. In addition, enterprises can seek professional services, such as tax consulting and agency services, to obtain more professional help and guidance. At the same time, errors and irregularities in the operation process can be avoided.

(Ⅱ) Strengthening the audit of goods input and properly responding to export correspondence

Export business involves many links and complex processes, foreign trade enterprises need to establish a perfect internal control system and risk management system, strengthen the risk investigation and prevention and control of each link and process, to ensure that the export business is real, legal and feasible, to avoid tax risks.

In the process of business development, risk investigation and prevention and control need to be carried out for different links and processes, including goods procurement, warehousing, transportation, customs clearance, tax rebate and other links, to find and solve possible problems in a timely manner. Among them, the management of tax rebate documents is the top priority of export tax rebate business, and it is necessary to strengthen the audit and management of the documents to ensure the authenticity, legality, completeness and accuracy of the documents, and to avoid the documents from being tampered or forged.

Strengthening the inspection and evaluation of suppliers can effectively reduce business risks and prevent business losses or tax refund risks due to supplier problems. The export enterprise should conduct a comprehensive assessment and audit of the supplier's reputation, strength and qualification.

In addition, when the enterprise exports goods, the tax authority that audits the tax refund will review the vouchers for the purchase of goods and the strength of its manufacturer, at which time it will send a letter to the manufacturer's tax authority for correspondence. If the upstream reply letter verifies that there is a problem with the upstream manufacturer, the export tax refund will be suspended, and the refunded tax will be recovered if it has already been refunded. Therefore, we suggest that when the exporter enters into a sales contract, it should be agreed from the civil perspective that the supplier will bear the civil liability in case of anomalies in the correspondence investigation. In addition, if the situation occurs due to correspondence can not refund the tax, should actively communicate with the tax authorities to claim their rights.

(Ⅲ) Strengthening the internal control system and isolating the subjective intention of tax fraud by general service enterprises

In practice, some foreign integrated services are small in scale and have a weak sense of compliance, believing that as an export platform, they only need to provide high-quality services and do not need to review the authenticity of the goods, which triggers a series of risks. Under the current policy, the advantages of the foreign comprehensive service of tax rebates and facilitating exports are easily utilized by lawless elements, turning into a tool for tax fraud and profit-making. For this reason, the foreign comprehensive service should build and improve the "firewall" to prevent the risk of export tax fraud:

1、Establish the credit monitoring mechanism for suppliers, review the business partners, and avoid the behavior of domestic and foreign customers colluding and deceiving the platform to cheat tax.

2、It is recommended to establish a tax-enterprise information exchange mechanism, whereby the foreign comprehensive service and tax authorities can share blacklisted tax-deceiving enterprises, so as to help the platform improve the prevention and control ability of risky enterprises and risky commodities in a targeted manner.

3、Establish a strict audit process, including desk audit and field audit, and keep the audit drafts for inspection. After the outbreak of a case, prove that you have fulfilled your auditing obligations and do not have the subjective intention of tax fraud.