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Foreign exchange clues led to a huge tax fraud case, the seven ministries and commissions should do a good job of tax refund compliance in the context of the normalization of the crackdown on tax frau

Jan. 3, 2024, 5:35 p.m.
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Recently, the Supreme Prosecutor and the State Administration of Foreign Exchange (SAFE) jointly released typical cases of punishing crimes involving foreign exchange. Among them, two cases were related to cheating export tax rebates through illegal trading of foreign exchange. In practice, the case-handling authorities in the fight against underground money changers in foreign exchange transactions found tax fraud clues, and then realize the whole chain to combat crime. Illegal trading of foreign exchange as a key link in the fraudulent export tax rebates for the domestic and foreign capital cycle provides support, disrupting the economic order, but does not necessarily deduce that the provision of foreign exchange to help constitute the crime of tax fraud. In view of this, this paper analyzes why the foreign exchange information abnormality has become the trigger for the outbreak of tax fraud cases from the two tax fraud cases announced, and puts forward the key points of defense for the readers' reference.

 

I. The Supreme Prosecutor and the Foreign Exchange Bureau jointly announced two major cases of cheating export tax rebates through illegal trading of foreign exchange.

(I)Case 1: Zhang Mouqun, Wu Mourui and Others Illegal Business, Fraudulent Export Tax Refund, and False VAT Invoice

1.Brief description of the case

      From July 2018 to November 2019, Zhang Mouqun, as the actual controller of Bao Mou Company, colluded with Le Mou Company, which has the right to export business, and Gu Moujie, the manager of Le Mou Company, to adopt the means of low-value and high-reporting, and fraudulently obtained the export tax rebate totaling more than 36,630,000 yuan.

      First of all, BaoMou company will be the low value of the translator, gyroscope and other electronic products at an inflated price to LeMou company, and issued VAT invoices, in order to deduct the input, and from the GongMouSen control of the company to obtain false VAT invoices. Secondly, Gu Moujie signed a false purchase and sales contract with Hong Kong Shunmou Trading Company controlled by Wu Mourui through Le Mou Company for customs clearance for export. In terms of funds, Zhang Mouqun remitted RMB to the domestic account controlled by Wu Mourui, and Wu Mourui deducted the commission and then transferred the US dollars purchased from others or the US dollars obtained from overseas trade to Le Mou Company through Hong Kong Shun Mou Trading Company as the payment for the purchase of the exported products. Finally, the Le company to carry out foreign exchange declarations and fraudulent export tax rebates.

2. Court Sentence

      The court convicted and sentenced Zhang Mouqun and Gu Moujie for the crime of fraudulently obtaining export tax rebates, Gong Mousen and others for the crime of fraudulently issuing VAT invoices, and Wu Mourui and others for the crime of illegal business operation.

(II) Case 2: Wang Mouliang and Others Illegal Business, Qingdao Agricultural Products Company Fraudulent Export Tax Refund Case

1. Brief description of the case

      From 2015 to 2020, a Qingdao agricultural product company took the way of low value overstatement to inflate the total export price of agricultural products to cheat export tax rebate. In the link of foreign exchange collection, the company remitted RMB into the account controlled by Wang Mouliang and others to purchase foreign exchange, and Wang Mouliang and others remitted USD into the company's designated account through the offshore account in accordance with the agreed exchange rate, and matched the corresponding foreign exchange in order to complete the settlement of foreign exchange.

2. Court judgment

      The court convicted and sentenced Wang Mouliang and others for the crime of illegal business operation.

Although the public information failed to clearly disclose the suspected tax fraud process of Qingdao Agricultural Products Company, according to the published information on the case handling process, the company was suspected of the crime of fraudulent export tax rebate.

(III) Summary: Abnormal foreign exchange information becomes the trigger for the outbreak of tax fraud cases.

      From the above, it can be observed that the two cases have the same points: one is the same means, both adopt the way of low value and high report to cheat the tax; the second is in the collection of foreign exchange, adopt the way of illegal trading of foreign exchange to satisfy the conditions of export tax rebate.

      In addition, according to the published information, case 2 is the foreign exchange bureau found foreign exchange information anomalies and outbreaks, that is, the foreign exchange bureau found a Qingdao agricultural company through the underground money changers illegal trade in foreign exchange, the clues will be transferred to the public security, public security according to this case investigation. In practice, there are also many cases of public security in the process of investigating suspected illegal business crime found that some companies foreign exchange information anomalies, there is the suspicion of fraudulent export tax rebates, the clues pushed to the Tax Bureau, the establishment of a joint tax and police task force to detect fraudulent tax cases, and to save the country's tax losses.

      It can be seen that, under the information interoperability between the foreign exchange bureau, tax, public security organs and other departments, the whole chain of crime fighting, the behavior of cheating export tax rebate through illegal trading of foreign exchange and forging false information on foreign exchange settlement is very easy to be investigated and dealt with.

II. the cause of abnormal foreign exchange information has become a trigger for the outbreak of risk

(I) policy reasons: the completion of the collection of foreign exchange is still one of the necessary conditions for the declaration of tax rebates

      The reason why foreign exchange has repeatedly become a fuse for the outbreak of risk is that the policy provides that the foreign exchange settlement information is one of the materials for declaring tax refunds. In the past, when export enterprises declared export tax rebate, they must provide "two single bills" that is, customs declaration, foreign exchange checklist, VAT invoice. 2012 August, in order to promote trade facilitation, foreign exchange administration, the General Administration of Customs and the State Administration of Taxation issued a document deciding that when export enterprises declared export tax rebate, they can no longer provide foreign exchange checklist. This initiative undoubtedly reduces the burden for enterprises and improves the efficiency of export tax refund. But this does not mean that the export enterprises apply for tax rebates no longer need foreign exchange information, complete the collection of foreign exchange is still one of the necessary conditions for the enterprise tax rebates, in other words, the export enterprises still have to provide the bank to settle the exchange rate and other information.

      In 2020, the Ministry of Finance and the State Administration of Taxation (SAT) issued a document to abolish the time limit for collection of foreign exchange, and at the same time, according to the "Announcement of the State Administration of Taxation on Matters Relating to Further Facilitating the Handling of Export Tax Refunds and Promoting the Stable Development of Foreign Trade" (Announcement of the State Administration of Taxation No. 9 of 2022), it streamlined the materials submitted by enterprises for the handling of export tax refunds, and took the information on collection of foreign exchange as the information for checking, which provided enterprises with This has provided great convenience for enterprises to handle export tax rebates, but has also secretly promoted the risk of some unscrupulous elements taking advantage of the policy loopholes to cheat taxes.

(II) Means cause: part of the fraudulent export tax rebate mode can not obtain foreign exchange

      In recent years, fraudulent export tax rebate mode means a variety of ways and means, and presents the characteristics of typology, part of the means determined by its inability to obtain the real foreign exchange, the need to obtain foreign exchange through illegal means has been completed to settle foreign exchange.

1. to buy a single ticket means fraudulent export tax rebates, need to match the export of goods all the foreign exchange funds

      "Buy a single ticket" is a common means of fraudulent export tax rebates. "Buying a single" refers to the actor to the customs broker, freight forwarding companies and other subjects to buy others can not apply for tax rebates or do not need to rebate the export of goods information, fill out customs declarations, the production of false foreign sales contracts; "Matching" refers to the actor based on the information on the goods, through the signing of a "Matching" means that the perpetrator, based on the information of goods, signs a false domestic procurement contract, forges the information of capital transactions, and lets others falsely open invoices matching the information of goods for himself. At the same time, due to the declaration of export tax rebates need foreign exchange settlement information, the perpetrator then illegally purchased foreign exchange from underground money changers to create the illusion of foreign exchange settlement, so as to fraudulently obtain export tax rebates. In this process, because of the Department of the export of borrowed goods, criminals are usually purchased with the export of goods to match the full amount of foreign exchange.

2. to take the low value of high means of fraudulent export tax rebates, the need to match the high part of the foreign exchange fund

      Because there are many types of export goods, the price difference is large. Even for the same kind of goods, due to manufacturers, materials, processes and so on, its price is bound to be different, and the customs lack of accurate supervision of export goods means, can not accurately grasp the price of export goods. Unlawful elements to take advantage of this regulatory loophole, through the forgery of domestic procurement contracts, low-priced goods falsely reported as high-priced goods, will inflate the high price of foreign sales revenue generated by the formation of foreign exchange collection and settlement of foreign exchange through the underground money changers, foreign exchange traffickers to buy the illusion. In this mode of tax fraud, the low value part of the foreign sales revenue generated by the real, high reported part of the foreign exchange income is false, due to the export of real goods, has a greater degree of concealment, difficult to be found by the customs, tax authorities, the outbreak of its cases more than from abnormal foreign exchange information clues to push.

3. Taking circular export means to cheat export tax rebate, only one foreign exchange income is real

      Circular export tax fraud on prop goods mainly refers to the illegal elements will be a batch of goods after the normal customs clearance for export, through smuggling behavior will be returned to the domestic, and then with false invoices and other domestic procurement documents, multiple customs clearance for export and apply for export tax rebates. In this process, the tax fraud group in order to maximize the benefits, will eventually sell the goods for real, at this time only one foreign exchange income is real, the rest of the cycle of the part, the criminals usually take illegal exchange fictitious foreign payment of goods to obtain foreign exchange records, so as to declare the tax rebate. This kind of tax fraud is characterized by the real goods as props, customs inspection only to do a single goods matching the form of audit, it is difficult to find doubt. Therefore, the circular export tax fraud also has a strong concealment, easy to escape from the fight, but the multi-departmental joint crime fighting, push clues, so that such tax fraud cases can be detected.

4. the export enterprises will export goods to their own control of foreign investors, foreign exchange reserves are insufficient, giving rise to the motivation to buy foreign exchange

      In practice, some foreign trade enterprises through the establishment of companies abroad in order to expand overseas markets. In this process, foreign trade enterprises will be a large number of goods exported to foreign countries, but or due to the establishment of foreign companies for a shorter period of time, foreign trade capital reserves are insufficient, at this time, the need for sufficient foreign exchange funds remitted to the territory of the foreign trade enterprises can apply for export tax rebates. Therefore, in order to make up for the shortage of foreign exchange funds, foreign trade enterprises may purchase foreign exchange from foreign exchange dealers, underground money changers, etc., and falsely settle foreign exchange to obtain collection materials.

(III) Regulatory reasons: the use of big data analysis and other departments to push foreign exchange information abnormal clues

1. Use of tax big data and abnormal foreign exchange collection data comprehensive analysis

      At present, tax supervision is increasingly evolving from "relying on reports to discover illegal clues" to "relying on tax big data to investigate clues", and a number of cases of fraudulent export tax rebates were investigated by tax big data analysis. For example, in September this year, the Fujian Tax Bureau and the Foreign Exchange Administration fully utilized the comprehensive analysis of tax big data and abnormal foreign exchange collection data to jointly crack a major case of fraudulent export tax refunds, involving more than 70 upstream invoicing enterprises, 22 foreign export enterprises, and 36 suspects were apprehended.

2. The data of seven departments are interconnected, and the whole chain is jointly cracked down on tax fraud.

      With the joint investigation and data interconnection of the seven departments, it has become a common reason for the risk of outbreak of crime that the clues of tax fraud are found by other departments and then transferred to the tax authorities or the multi-departmental chain of joint cases. As mentioned before, Case 2 is the case in which the foreign exchange bureau discovered abnormal information on tax fraud, transferred the clues to the public security authorities, and opened an investigation, realizing the whole chain of combating tax fraud.

III. abnormal collection and settlement of foreign exchange is necessarily constitute fraudulent export tax rebates?

      Although the illegal trading of foreign exchange with the means of fraudulent export tax rebates, but does not mean that there are irregularities in the collection and settlement of foreign exchange and other behavior must constitute fraudulent export tax refunds. Because the export tax rebate business is more complex, there are many links, there are inevitably some non-compliance, if the foreign exchange information is abnormal, the risk will be passed on to the enterprise, the enterprise involved, the relevant personnel should be actively involved in effective communication with the authorities to avoid the risk of expansion.

(I) business model defense: some of the irregularities in the collection of foreign exchange there are objective factors

1. the export of goods has the authenticity, the purpose of illegal collection of foreign exchange is to realize to meet the requirements of the declaration of tax refunds, rather than tax fraud

      According to Article 204 of the Criminal Law, the offense is described as "falsely declaring exports or other deceptive means, cheating the state export tax rebates", which makes it clear that deception must be a constitutive element. The case-handling authority determines whether the perpetrator constitutes the crime of obtaining export tax rebates by deception, and should strictly follow the criminal law and the judicial interpretation of obtaining export tax rebates by deception, and analyze the crime one by one in terms of its constituent elements. Subjectively, the purpose of the perpetrator is to meet the requirements of foreign exchange collection, rather than fraudulent export tax rebates; objectively, although the violation of foreign exchange collection and settlement of foreign exchange, but not fraudulent state tax refunds, it should not be recognized as a tax fraud, in accordance with the relevant provisions of the tax law policy can be dealt with.

2. due to the lack of foreign exchange reserves, through the underground money changers and other ways to buy to meet the time requirements for the collection of foreign exchange

      The State Administration of Taxation Announcement No. 9 of 2022, Article 8 of the document on the enterprise export tax rebates and exemptions of the management of the collection of foreign exchange has been improved. If the exported goods are not collected in accordance with the stipulated time, i.e., "if the final date of full collection is agreed in the export contract to be after the deadline of the tax refund and exemption declaration period, the collection is not completed before the date of collection agreed in the contract; the collection is not completed within the stipulated period and does not comply with the provisions of deemed collection; and the collection materials are not retained in accordance with the provisions of this article." The tax authorities shall not handle export tax refund for enterprises, and if they have already done so, they shall use the negative declaration to offset the original tax refund and exemption declaration data in the following month of the occurrence of the relevant circumstances, and in the case of insufficient offsetting, they shall also require the enterprises to make up for the difference in part of the tax payment.

      As mentioned before, some enterprises have set up companies outside the country to expand export sales, and in practice, there may be the problem of insufficient foreign exchange reserves, and they cannot make payments according to the time agreed in the contract, which leads to the export enterprises not being able to complete the collection of foreign exchange in the stipulated declaration period, and not being able to apply for the export tax rebate. Therefore, some export enterprises in order to meet the requirements for declaration of tax rebates, through illegal trading of foreign exchange, to obtain the corresponding settlement of foreign exchange water list and other information to meet the requirements of the collection time to complete the declaration of tax rebates.

(II) Subjective intent defense: no intent to cheat taxes

1. can not be only to the actors objectively provide foreign exchange help on the determination of tax fraud with common intention

      False settlement of foreign exchange is a component of the implementation of tax fraud, should be comprehensively investigate all the criminal facts, clear the role of each actor in the case of tax fraud and play a role, can not just because of the foreign exchange personnel for the enterprise to provide foreign exchange help, it is presumed to provide help to the person with the intent to defraud the tax, the need for sufficient evidence to prove that help to help the person beforehand with the enterprise involved in the case, the relevant people conspire to defraud the tax, or Knowing that tax fraud still provides foreign exchange assistance for them.

      As in the two cases mentioned above, the authorities are of the opinion that to determine whether it constitutes a joint crime, it is necessary to subjectively have the intention to cheat tax together and objectively have the behavior of participation and assistance. For the evidence to prove that constitutes a joint crime of cheating export tax rebates is insufficient, it is not appropriate to determine the tax fraud, but the illegal trading of foreign exchange behavior is serious and constitutes a crime, you can be convicted and punished for the crime of illegal business.

2. the evidence in the case can not prove that the perpetrator subjectively exists in tax fraud intention, does not constitute a crime

      As mentioned before, it is necessary to prove that the perpetrator constitutes the crime of tax fraud from both subjective and objective aspects. Obtaining export tax rebates, not only need to collect and settle foreign exchange, but also includes signing internal and external purchase and sales contracts, goods procurement, sales and transportation, invoicing, and many other aspects, these facts must be investigated one by one, through the evidence in the case proves that the perpetrator subjectively has the intention of tax fraud, objectively there is a fraudulent tax behavior, can be determined that the perpetrator constitutes tax fraud.

(III) Defense of tax fraud amount: it is not reasonable to determine the amount of tax fraud by all the tax obtained by application

1. The purchased goods have been tax-paid, and inflating the price of foreign exchange and exported goods will not lead to tax fraud, which is a criminal offense.

      According to 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), the basis for calculating the VAT refund of foreign trade enterprises is the amount stated in the VAT invoice of the purchased exported goods, which is not the price of the exported goods, and the actual amount of the tax refund can not exceed the amount of the input VAT that has been paid. In other words, for foreign trade enterprises, even if they overstate the price of goods for export, they can only obtain the input VAT paid at most, and the part of overstating the price of goods for export can neither generate additional benefits for them, nor can it cause the possibility of the state refunding more tax, which is a criminal offense.

2. Tax fraud is a result crime, and the actual amount of national tax refund shall prevail.

      In practice, the low value of high means of tax fraud due to the export of real goods, the existence of real tax refund business, resulting in fraudulent export tax refunds is difficult to determine the amount of some of the case-handling organs simply and roughly to apply for all the tax amount of tax fraud, does not have the reasonableness of the amount of tax fraud. This is because the fraudulent export tax rebate is a special fraud, the result of the crime, and its speciality is that the object of fraud is the state's export tax rebate. In the case of fraud, is the actual loss of the victim to determine the amount of fraud. For the case of tax fraud, should also be the actual fraud of the national export tax rebates that the amount of tax fraud. For example, an enterprise that overstates its exports, first obtains legal VAT invoices (e.g., amounting to $10), and then falsely opens high-priced VAT invoices (e.g., amounting to $30) from a third party, the amount of its fraudulent tax should be deducted from the portion of the VAT inputs that were paid in good faith, and the fraudulent amount cannot be determined by the full amount of the tax obtained by the application.

 

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