Article 201 of the Criminal Law of China provides for the provision of the reasons for tax evasion, i.e., after the tax authorities have issued the notice of recovery according to the law, the person shall not be held criminally liable for making up for the tax due, paying the late payment penalty, and has already been subject to the administrative penalty. However, in judicial practice, how to apply the tax evasion blocking provisions for individual cases is still controversial, this paper intends to analyze the application of the tax evasion blocking provisions through a typical case.

I. Introduction of the case

(I) the basic facts of the case

Defendant Zhang Mou Dong was the general manager of the defendant unit S City T Investment Company (hereinafter referred to as T Company), and Defendants Li Mou Shuang and Peng Mou Hui, both financial managers of T Company, decided to sell and transfer T Company, knowing that the company had a huge amount of unpaid taxes and had not made up for the owed taxes. In order to transfer the company's equity, Company T hired CPA B and Y Asset Appraisal Co. to audit and appraise the company.

In July 2014, CPA Firm B audited the financial statements of Company T and issued an audit report: the balance of tax payable by Company T amounted to RMB11,042,000, and there was uncertainty in the related tax matters as the project had not yet been finalized. in August 2014, Y Asset Appraisal Co., Ltd. appraised the assets and liabilities of Company T and issued an appraisal report: the total assets of Company T amounted to RMB15,239,400 and the liabilities amounted to RMB152,393,400, and the total liabilities amounted to RMB152,934,000. 152,393,400, total liabilities of RMB90,832,000, fair value (net assets) of RMB61,561,400; the balance of tax payable was RMB11,042,000, and as the construction had not been finalized, there were uncertainties in the relevant tax matters involved therefrom.

In September 2015, the shareholders of Company T and the transferee entered into an equity transfer contract, which reads as follows: the transferor undertakes that it has fully informed the transferee of the contracts yet to be fulfilled by Company T and the fees and debts payable by Company T before 31 December 2014, and that the transferor shall be responsible for the fees and debts payable, if any, in addition to the disclosed matters. after the completion of the transfer of equity interest in Company T, the transfer will be made in accordance with the law to the shareholders The transfer payment was distributed and the registration was changed, and the general manager of Company T was changed from Zhang Mou Dong to Zhong Mou Duo.

On August 5, 2016, Gao Moumou reported a total of 31.42 million yuan of tax evasion by Company T to the Tax Bureau of District S City F. On August 20, 2016, the Inspection Bureau of the Tax Bureau of District S City F filed a case of tax audit on Company T's tax payment from 2005 to 2015.On June 17, 2018, Company T, in response to the Opinion on Reconciliation of Tax Audit Situation served by the tax authorities, stated in writing that "The amount is confirmed to be correct and there is no objection".On December 26, 2018, the tax authorities served Company T with the Decision on Tax Processing and the Decision on Tax Administrative Penalty, deciding that Company T should make up a total of RMB 309,940,096.51 in taxes and RMB 28,856.29 in education surcharges, amounting to a total of 31022952.80 yuan; it was decided to impose a fine of 437445.34 yuan on Company T. On January 10, 2019, the tax authorities served Company T with a Notice of Tax Matters, notifying Company T to pay a total of 30,994,096.51 yuan of tax, 28,856.29 yuan of surcharge on education fees, 3,777,612,024.12 yuan of late payment fees, and a fine of 437445.34 yuan, for a total of totaling $6,923,642,422.26, but Company T refused to pay.

On May 10, 2019, the Inspection Bureau of S City F District Taxation Bureau transferred the case of suspected tax evasion of Company T to the Public Security Bureau of S City F District for investigation.On March 14, 2020, the Public Security Bureau of S City F District arrested Defendant Zhang Moudong.On March 15, 2020, the Public Security Bureau notified Defendant Li Moushuang by phone, and then Defendant Li Moushang took the initiative to go to the Public Security Bureau to accept the investigation.On March 20, 2020 , the defendant Peng Mouhui voluntarily surrendered to the public security organs.

(II) Focus of the dispute: whether the defendant Zhang Mudong and others have criminal obstruction of tax evasion crime

The public prosecution believes that the defendant T company to conceal income means false tax declaration, tax evasion amount is huge and accounted for more than 30% of the taxable amount, the defendant ZhangMouDong, LiMouShuang, PengMouHui is the company general manager, financial manager, instructed the company personnel to implement the above behavior, and by the tax authorities according to law issued a notice of recovery, do not make up for the tax payable, do not pay the late fees and do not accept administrative penalties. Accept administrative punishment, violated the "Criminal Law of the People's Republic of China" Article 210, paragraph 1 of the provisions of the criminal facts are clear, the evidence is true, sufficient, the defendant ZhangMouDong, LiMouShuang, PengMouHui should be tax evasion to pursue their criminal responsibility.

Defendant Zhang Moudong's defense counsel argued that after the change of T Company's equity, Defendant Zhang Moudong has left T Company, and can no longer have an impact on T Company, and can not cooperate with the tax authorities to make up for the tax, late fees and fines, and does not constitute the crime of tax evasion.

(III) Court judgment: Defendant Zhang Mudong and others did not constitute the crime of tax evasion

The court held that the filing of audit and issuance of recovery notices by the Inspection Bureau of S City F District Bureau to Company T occurred after the transfer of Company T's equity, and that the new shareholders and management personnel of Company T should bear the tax obligations, and that the original shareholders had already disclosed that they still owed 11,042,000 yuan of tax at the time of Company T's transfer. The Equity Transfer Contract stipulates that "the transferor shall be liable for any expenses and debts incurred by Company T in addition to those already disclosed", and the current shareholders may file a separate application for Company T's unpaid taxes and other amounts. In addition, the tax authorities of company T's audit and issued a notice of recovery, the original company managers defendant ZhangMouDong did not know, and defendant ZhangMouDong even if he knew the recovery of taxes, but also can not cooperate with the tax authorities to pay taxes, accept the punishment. Therefore, after the change of company T, the defendant ZhangMouDong does not have to fulfill the conditions to pay the tax, late payment and accept the punishment, the defendant ZhangMouDong, LiMouShuang, PengMouHui is not guilty.

II. the legal analysis of criminal obstruction of tax evasion crime

(I) The application of criminal interdiction of tax evasion shall meet three conditions at the same time.

According to Article 57 of the Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on the Criteria for Filing Criminal Cases under the Jurisdiction of the Public Security Organs (II), evasion of payment of taxes shall be prosecuted if one of the following circumstances is suspected: the taxpayer adopts deception or concealment to make a false tax declaration or does not make a declaration to evade payment of taxes, which amounts to more than 50,000 yuan and accounts for more than 10% of the total amount of each type of tax payable. After the tax authorities issued a notice of recovery according to law, do not make up the tax due, do not pay late fees or do not accept administrative penalties ...... taxpayers in the public security organs to file a case and then make up the tax due, pay late fees or accept administrative penalties, does not affect the pursuit of criminal responsibility.

According to the above legal provisions can be seen: the establishment of tax evasion crime blocking cause, need to meet the following three conditions at the same time:

First, after the tax authorities;

Second, after the tax authorities issued a notice of recovery according to law, the perpetrator pays the tax due, pays the late payment fee, and has been subject to administrative punishment;

Thirdly, except that the perpetrator has been criminally punished within five years for evading payment of tax or has been given more than two administrative penalties by the tax authorities.

(II) Judicial organs shall not directly pursue criminal liability in tax evasion cases not handled by tax authorities.

According to the relevant provisions of the "Tax Collection and Administration Law", the tax department found that the enterprise may have tax evasion, tax inspection should be carried out by the tax inspection department, according to the conclusion of the inspection of taxpayers for tax recovery, administrative penalties, suspected of criminal taxpayers referred to the public security organs for investigation. However, in practice, there are some cases without tax inspection, that is, directly by the public security investigation and pursue enterprises and even shareholders, executives of criminal responsibility, depriving taxpayers of the right to correct their tax behavior. Moreover, the direct involvement of the investigating authorities without going through the procedures of the tax authorities is not in line with the legislative spirit of Paragraph 4 of Article 201 of the Criminal Law.

The Amendment (VII) to the Criminal Law changed Article 201 of the Criminal Law from "tax evasion" to "tax evasion", and Paragraph 4 of Article 201 of the revised Criminal Law stipulates that "if a person who has committed the acts in Paragraph 1, and after the tax authorities have issued a notice of recovery in accordance with the law, the person shall make up the tax due after the tax authorities have issued a notice of recovery. After the tax authorities have issued a notice of recovery in accordance with the law, the person shall pay the tax due, pay the late fee and shall not be held criminally liable if he or she has already been subjected to administrative penalties". The purpose of this amendment to the Criminal Law is to protect the order of tax collection and management on the one hand, and to facilitate the tax authorities to recover the tax, and on the other hand, to give the taxpayers the opportunity to rectify their tax payment behaviors, which is important for the maintenance of the normal operation and development of the enterprises.

At the same time, the tax authorities to deal with procedural front also lies in the fact that the tax evasion behavior first violates the tax law, when the amount and proportion reaches a certain level before violating the criminal law constitutes a crime, that is, only when the administrative penalties are insufficient to punish the perpetrator, it is necessary to hold him criminally liable. The determination of the crime of tax evasion not only involves the amount, but also should determine the proportion of the tax evasion amount occupying the taxable amount. The determination of tax evasion amount and taxable amount involves different tax types, and the determination of both numerator and denominator requires professional tax inspection experience. The front-loading of the tax authorities' handling procedures is conducive to the tax authorities' advantage of strong professionalism and accurate characterization of tax evasion. Therefore, the author believes that the judicial organs shall not directly pursue criminal liability for tax evasion cases not handled by the tax authorities.

(III) During the period of administrative reconsideration and litigation filed by taxpayers in accordance with law, the tax authorities shall not transfer the cases to the judicial organs.

According to the provisions of Article 88 of the Tax Collection and Administration Law, when a dispute arises between the taxpayer and the tax authorities on taxation, the taxpayer must first pay or pay the tax and late payment or provide the corresponding guarantee in accordance with the tax decision of the tax authorities, and then apply for administrative reconsideration in accordance with the law; if the decision of the administrative reconsideration is not accepted, the taxpayer may sue the people's court in accordance with the law.

In judicial practice, taxpayers and tax authorities after tax disputes, taxpayers and the urgent need to start the review or litigation legal remedies to safeguard their legitimate rights and interests. However, some enterprises have low profits, no strength to pay back taxes, late fees and fines, the tax bureau's treatment is unacceptable, for such a situation, most taxpayers of the tax authorities issued administrative penalties directly exercise the right to reconsideration, administrative litigation, at this time, for the case is in the relief procedure, the tax authorities should not be transferred to the judicial organs.

We believe that, before the expiration of the administrative relief period of the penalty decision, the penalty decision has not come into effect, and its determination of the existence of the taxpayer's violation of the facts in an uncertain state, the taxpayer through the judicial remedial procedures, administrative reconsideration or administrative litigation, may be overthrown by the tax authorities to determine the facts of the violation of the law, in which case the basis of the act constituting a crime no longer exists. If the tax authorities in the taxpayer did not pay the tax, late payment and fines, that is, transferred to the public security into the judicial process, not only contrary to the criminal law on tax evasion set up to block the cause of the legislative purpose, but also serious damage to taxpayers in accordance with the law to bring the right of administrative reconsideration, administrative litigation. Accordingly, the author is of the view that before the expiration of the period of administrative remedies stipulated by law, even if the taxpayer fails to pay the fine within the period stipulated in the decision on tax administrative penalty, the taxpayer cannot be recognized as "not accepting the administrative penalty", and the case cannot be transferred to the judicial organs for this reason.

III. the defendant ZhangMouDong, etc. does not constitute the crime of tax evasion jurisprudence analysis

In practice, when the tax authorities find that the taxpayer has forged, altered, concealed, destroyed the books of account, bookkeeping vouchers without authorization, listed more expenses on the books of account, or not listed, or under-listed income, and other means to conceal the true situation, and do not or underpay the tax behavior, it will be characterized as tax evasion, and the tax authorities will be dealt with, and penalties will be imposed. Usually, the tax authorities will specify a certain period of time, such as "you are limited to the date of receipt of this decision within fifteen days from the date of your company to the account of your company's tax account of the bank to pay the above taxes and late fees into the treasury". As long as the perpetrator fulfills the processing decision and penalty decision of the tax authority within this period, he should not be held criminally liable. After the perpetrator pays the tax and late payment fees and pays the fine, if the perpetrator files an administrative reconsideration or an administrative lawsuit against the tax authorities' handling of the case, it does not affect the establishment of the conditions for exempting the perpetrator from pursuing criminal liability. However, if the perpetrator does not pay the corresponding taxes, late fees and fines within the prescribed period, the tax authorities will issue a reminder, the reminder period expires, the tax authorities can be enforced through the enforcement procedures to recover state taxes.

In this case, the tax authorities did not carry out compulsory enforcement of the T company, but transferred to the judicial authorities. Combined with the judgment, it can be seen that Zhang Moudong and others do not constitute the crime of tax evasion on the grounds that: after the change of the equity of Company T, the defendants Zhang Moudong and others left Company T and could no longer have any influence on Company T. The inspection of Company T by the Inspection Bureau of the District Bureau of City F of S and the issuance of the notice of recovery both took place after the transfer of the equity of Company T, and it should be assumed by the new shareholders and management of Company T to bear the obligation of tax payment, pay the tax payable, late fees, and pay penalties, and the original shareholders had disclosed the outstanding taxes of 11,042,000 Yuan at the time of the transfer of T Company. It was agreed in the Equity Transfer Contract that "the transferor shall be liable for any expenses and debts payable by Company T in addition to the matters disclosed", and the current shareholders may file an administrative reconsideration or an administrative lawsuit if they are not satisfied with the handling of the tax authorities, and may also claim that the original transferor of Company T shall be liable for the expenses and debts payable by Company T if the original transferor fails to fulfill the obligations under the Equity Transfer Contract. At the same time, according to the agreement of the equity transfer contract, the original transferor of Company T can be held liable, and if the original transferor fails to fulfill the contract, it can initiate civil litigation or arbitration. In addition, the tax authorities on the T company's investigation and issued a notice of recovery, the original company managers defendant ZhangMouDong and others do not know, and defendant ZhangMouDong and others, even if they know the recovery of taxes, but also can not cooperate with the tax authorities to pay taxes, accept the punishment. Therefore, after the change of company T, the defendant ZhangMouDong and others do not have to fulfill the conditions to pay the tax, late payment and accept the punishment, does not constitute the crime of tax evasion, should not be held criminally liable.

IV. Summary

To summarize, for tax-related violations of taxpayers, if suspected of constituting a crime, the tax authorities should be transferred to the judicial authorities according to the law, and penalties shall not be substituted for penalties. However, according to the provisions of Article 201 of the Criminal Law on tax evasion, the perpetrator accepts that the handling procedure of the tax authorities is a necessary condition for exemption from criminal punishment, so the handling procedure of the tax authorities should be initiated first. At the same time, taxpayers who have objections to the administrative penalty decision can directly exercise the right of reconsideration and administrative litigation, and the tax authorities shall not transfer the case to the judicial authorities during the period when the taxpayers initiate the administrative remedies.

Meanwhile, it should be reminded that in the equity transfer business, the transferee should conduct a comprehensive due diligence on the debt and tax situation of the subject of the transfer, and discover the possible risks of tax arrears, tax evasion and tax evasion in the transfer business in a timely manner, and then make adjustments to the transfer business, so as to avoid incurring unnecessary losses as a result.

Currently affected by the new crown epidemic, China's economic and social development has been a serious impact, the central government in emphasizing to increase the "six stability" and then put forward the "six guarantees" requirements, and stabilize the private enterprises, private entrepreneurs is "six stability", "six guarantees", "six guarantees", "six guarantees", "six guarantees", "six guarantees", "six guarantees", "six guarantees". The stabilization of private enterprises and the protection of private entrepreneurs are the proper meaning of the "six stabilizations" and "six guarantees". In this case, the judicial authorities for the handling of criminal cases of tax evasion should fully consider the actual operational difficulties of enterprises in the context of the new crown epidemic and the requirements of the "six stabilizers" and "six guarantors", and make reasonable rulings on enterprises, which is also in line with the requirements of the criminal policy of leniency and severity. Of course, it is also necessary to remind taxpayers to pay attention to the fact that after being issued a notice of tax reimbursement by the tax authorities, they have to respond to the solution in a timely manner, and should not procrastinate to lead to more unfavorable results.