Editor's Note: In the context of globalized trade, Chinese foreign trade enterprises are facing a complex and changing legal environment. With the economic downturn, "false self-operation real agent" model is still a prohibited illegal behavior. This model not only touches the bottom line of export tax rebate compliance, but also easily triggers the criminal risk of tax fraud. This article discusses the legal logic behind this mode through the analysis of a recent case and interpretation of judicial interpretation, and analyzes how the foreign trade enterprises involved in the case can actively use the latest judicial interpretation to defend themselves and strive for the best results.

Ⅰ. The defendant using “false self-operation real agent" model operate tax fraud, foreign trade enterprises "dodged a bullet"

(i) Basic facts of the case: tax fraud using the "false self-operation real agent" model

Shanghai Putuo District People's Court criminal judgment shows that the defendant A is the person in charge of A company, in the actual business process, and foreign trade enterprises B company established a "false self-operation real agent" model of export cooperation. However, during the period of business development, A took advantage of the loopholes of the "false self-operation real agent" model of export, and implemented the means of "buying a single ticket", and provided the false export trade information and the corresponding ticket VAT invoices, contracts, etc., to Company B for the purpose of customs declaration and tax refund. Tax refund. Defendant B assisted A in making contracts, matching input and output invoices according to the contract amount, and assisting in the return of funds. Eventually, Defendants A and B constituted the crime of fraudulent export tax rebate and were sentenced to imprisonment according to the law.

(ii) Case analysis: foreign trade enterprises do not seem to be involved in the case, and do not constitute the crime of defrauding export tax refunds.

The particularity of this case is that Company B, as a foreign trade enterprise actually declaring export tax rebates, violated the implementation of the "false self-operation real agent" model of business, and due to the loopholes in the business model led to a fraudulent national export tax rebates, the criminal risk is extremely high. In the past, a number of foreign trade enterprises have been convicted of fraudulent export tax rebates due to similar business models. However, as far as the content of this judgment is concerned, Company B was not involved in the case, nor was it dealt with in a separate case. The author deduces that Company B may not constitute the crime of obtaining export tax rebates due to the fact that it does not have the subjective intention of "knowing". The judicial authorities have adopted the same treatment mode as the typical case of "Guangzhou Deluan Company, Xu Zhanwei fraudulent export tax refunds without crime". However, it should be pointed out that the administrative responsibility of Company B in tax law is still unavoidable.

(ⅲ) question: foreign trade enterprises to implement "false self-operation real agent" model is necessarily constitute a crime?

In practice, "false self-operation real agent" model is always hanging over the head of foreign trade enterprises of the sword of Damocles. Foreign trade enterprises in the business will be all the money and most of the export tax rebates are allocated to the actual exporter, only to earn the cost of export agency, but also to guard against the actual exporter through the implementation of the "buy a single with the ticket" "low-value high" and other means of fraudulent export tax refunds. In the past, the judicial practice from the strict and heavy to determine the responsibility of foreign trade enterprises, a lot of foreign trade enterprises therefore constitute a tax fraud crime, facing prison.

However, Since the case of "Guangzhou Deluan Company, Xu Zhanwei fraudulent export tax rebates", the judicial practice began to consider this business model from the perspective of joint crime. Some judicial organs no longer simply presume that foreign trade enterprises subjectively with intent, and accordingly determined that the foreign trade enterprises do not constitute the criminal law of tax fraud, this judicial practice also reacted to the judicial interpretation. However, what kind of behavior constitutes tax fraud, and what kind of mode can make foreign trade enterprises out of crime, is still a questionable issue, need to be analyzed in conjunction with the latest judicial interpretation.

II. Inadequacies, Amendments and Development of the "Four-Self, Three-Out-of-Sight" Tax Fraud Provisions

(i) “False self-operation, real agent" model and "Four-Self, Three-Out-of-Sight" model

“False self-operation, real agent" model refers to the foreign trade enterprises and the actual exporter agreement, the export enterprise will lend its enterprise name to the actual exporter, in the name of self-managed exports to declare export tax rebates. However, the actual export business remains the responsibility of the actual exporter, and the export enterprise is not responsible for and does not supervise the authenticity of the export business, and does not bear any risk of the export business. This business model is evolved from the "four from three missing" model.

The "Four-Self, Three-Out-of-Sight" refers to "merchants" or intermediaries with their own customers, bring their own sources of goods, bring their own bills of exchange, their own customs clearance and export enterprises do not see the export of products, do not see the supply of goods, do not see the export business of foreign business. From the expression of this connotation can be seen, "four from three do not see" is a category of "false self-operation real agent" model of business.

In the past, due to the Supreme People's Court "on the trial of criminal cases of fraudulent export tax refunds on the specific application of the law on a number of issues of the Interpretation" (Legal Interpretation 〔2002〕 No. 30, has been repealed, later referred to as the "2002 Tax Fraud Judicial Interpretation"), Article 6, the export enterprises know that other people want to fraudulently obtain the national export tax refunds, and still in violation of the provisions of the implementation of the "four from three missing" business, resulting in fraudulent export business. Do not see" business, resulting in tax fraud results, constitutes the crime of fraudulent export tax refunds. Many foreign trade enterprises are thus implicated by the actual exporters and face the risk of the crime of obtaining export tax rebates by deception.

(ii) The shortcomings of the "Four-Self, Three-Out-of-Sight" tax fraud provisions of the "2002 Judicial Interpretation of Tax Fraud".

From the "2002 Tax Fraud Judicial Interpretation" of the text and the theory of criminal law, the export enterprise only allows others to bring their own customers, bring their own source of goods, bring their own bill of exchange, their own customs declaration, will not cause any loss of national export tax rebates, but only the export industry a special class of dependent exports. Only when the actual exporter commits tax fraud and constitutes the crime of obtaining export tax refunds, the export enterprise may constitute a crime. At this time, the export enterprise is essentially as a joint crime to deal with, need to consider its subjective whether the joint criminal intent, that is, whether "knowingly" the occurrence of tax fraud.

However, in judicial practice, as the subjective intent of the perpetrator is a matter difficult to be directly proved, in addition to the confession and testimony of the relevant persons to restore the perpetrator's "thoughts", it is mainly through the way of "subjectivity to objectivity", from the objective behavior of the perpetrator to the objective behavior of the perpetrator. The objective behavior of the perpetrator is used to deduce whether he or she has the subjective intention of "knowing". For example, in 2004, the second series of Criminal Trial Reference, "if the other party intends to cheat the export tax rebate, will inevitably be in the specific operation of the relevant procedures in the process of false, foreign trade companies, enterprises in the export tax rebate, it is not possible to have not been aware of it at all. If in the detection of each other incomplete formalities, false documents, but still through the "four from three see" way for each other for tax refunds, regardless of their motives, at least in the subjective with the implementation of fraudulent export tax refunds let other people have the intention of intent."

The above thesis has become a large number of foreign trade enterprises involved in the case. Because according to the thesis, foreign trade enterprises "can't not be aware of" to the tax cheating molecules are false. Therefore, as long as the foreign trade enterprises to implement the above business, and finally proved that the business is false, the foreign trade enterprises subjectively at least is indirectly intentional. In a large number of cases, the judicial authorities do not recognize the foreign trade enterprises' claim that they are deceived and deceived by the actual exporters, and consider that the foreign trade enterprises know that the "four self-three missing" "false self-operation real agent" model is a violation of laws and regulations, and should know that the actual exporters are likely to commit tax fraud. The actual exporter is likely to commit tax fraud, but still allows him to carry out the export business and declares the export tax refund for him, which is indirectly intentional and therefore constitutes a crime.

(iii) Changes and amendments in judicial practice

In 2019, the Supreme People's Court issued the "Ten Typical Cases of Equal Protection of Private Entrepreneurs' Personal and Property Safety According to Law", which included Guangzhou Dewan Company and Xu Zhanwei's no crime of fraudulent export tax rebates, suggesting that whether a foreign trade company has subjective intent or not needs to be determined in combination with objective evidence. Foreign trade enterprises have implemented the behavior of "four from three missing", it cannot be directly presumed that foreign trade enterprises are subjectively to help the actual exporter to cheat tax. At the same time, the evidence provided by the foreign trade enterprises to claim that they are subjectively unaware of the evidence will be recognized, and the defendant can be recognized through the evidence to override the prosecutor's presumption, the 2nd series of 2004, "Criminal Trial Reference" view has been greatly amended. Since then, the judicial authorities began to adopt the above views, individual cases began to "let go" of foreign trade enterprises, only to pursue the criminal liability of tax fraud.

(ⅲ) The Two Supremes’ Judicial Interpretations deleted this article and returned to the theory of complicity.

In March 2024, the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Administration (Legal Interpretation [2024] No. 4, hereinafter referred to as the "Judicial Interpretation of the Two Higher Levels") was issued, deleting the above provision that the "four self and three no see" constitutes the crime of tax fraud. However, Article 19 of the Judicial Interpretations of the Two High Commissions stipulates that "if a person knows that another person has committed a crime of jeopardizing the tax collection and management and still provides him with an account number, a credit certificate or other assistance, he shall be punished as an accomplice to the corresponding crime", indicating that the "four selfs and three don't" The business model of "false self-operation real agent" model will return to the theory of criminal law.

It should be noted that this does not mean that the "four self three missing" "false self-operation real agent" model no longer constitute tax fraud. On the contrary, the judicial authorities in accordance with the theory of joint crime, if it can be determined that the foreign trade enterprises and tax fraud perpetrators with the subjective consent, objective help behavior, the foreign trade enterprises still constitute the tax crime of complicity, and according to the size of its role in determining whether the Department of the principal or accessory. Therefore, the criminal risk of foreign trade enterprises is still not mitigated, only in the defense strategy has changed, from the past core entangled in the "knowingly" or "not knowingly" on the issue, shifting to argue whether it constitutes a joint crime.

Ⅲ. The common criminal theory under the foreign trade enterprises "false self-operation real agent" model of defense

(ⅰ) Joint criminal theory compared to the "2002 judicial interpretation of tax fraud" progress

The theory of joint crime in criminal law is to explore the legal consequences of two or more people to jointly commit criminal acts. According to the provisions of the Criminal Law, joint crime refers to a joint intentional crime committed by two or more persons, which requires the participants to have a common criminal intent subjectively and to have committed the criminal act objectively:

Subjectively, co-offenders are required to have a common criminal intent, i.e., common intention. This includes a consistent understanding of the purpose of the crime and the act. In the case of fraudulent export tax rebates, it is required that the foreign trade enterprise and the actual perpetrator of the tax fraud have reached a consensual agreement of complicity, and the foreign trade enterprise should recognize that the perpetrator is intended to fraudulently obtain an export tax rebate, and has implemented the act of tax fraud.

From the objective point of view, the co-conspirators objectively implement the acts that jointly lead to the occurrence of the illegal facts, and their acts are joint and several in terms of illegality. This part was less explored in the past, and the general judicial authorities believe that the 2002 Judicial Interpretation of Tax Fraud will be "four from the three do not see" explicitly stipulated as illegal behavior to help fraudulent export tax refunds, so there is no need to additionally explore the issue of whether the behavior of the foreign trade enterprises with the illegality of the implementation of the problem.

According to China's "subjective and objective unity" principle of criminal law, the judicial organs to deal with cases of joint criminal mainly have the following three steps: first, to determine whether there is a common behavior; second, to confirm whether there is a common intention; finally, according to their respective roles in the crime and culpability, respectively, convicted and sentenced.

As can be seen from the above, the application of the theory of joint criminal offense is very complicated. Article 6 of the 2002 Judicial Interpretation of Tax Fraud is essentially a "simplification" of the theory of complicity, i.e., the objective aspect directly determines that the "four from the three do not see" behavior is a joint act of fraudulent export tax rebates, and the subjective aspect only requires that the foreign trade enterprise The subjective aspect only requires that the foreign trade enterprises "know" that the perpetrators have committed tax fraud, and this subjective "knowledge" can be presumed through some simple objective behaviors. Therefore, the author believes that the "two high judicial interpretations" emphasize the theory of complicity, the foreign trade enterprises involved in the case has a positive significance, the judicial authorities should use criminal law theory to analyze each case of foreign trade enterprises in the objective behavior and subjective intent to argue whether it constitutes complicity to narrow the circle of crime, to achieve justice in individual cases.

(ii) The defense of not having common objective behavior

A joint crime requires that the means of committing the crime have been jointly carried out between the subjects committing the crime. "The acts of each actor are directed toward the same crime, are interconnected and cooperate with each other to form a unified whole." Among these acts, there are acts of commission, acts of abetting, acts of aiding, and in special cases there are acts of aiding by omission on the part of the party who owes a specific duty. However, these acts belong to the harmful acts, should have the wrongfulness of the crime.

When the foreign trade enterprises in carrying out "false self-operation, real agent" model of business, if it is involved in the perpetrator of the "buy a single ticket", false invoicing, false settlement and so on tax fraud in the implementation of the act, of course, it has a common objective behavior. However, if the foreign trade enterprise only performs the act of declaring the export tax rebate, due to the declaration itself is not the implementation of tax fraud, and does not have the unlawfulness, then it is difficult to say that the foreign trade enterprise has the common objective behavior of fraudulent export tax rebate.

(iii) The defense of lack of joint criminal intent

The intent to commit a joint crime must be intentional, including direct intent and indirect intent, i.e., each actor actively pursues or indulges the objective behavior of the joint crime will trigger the occurrence of criminal results. When a foreign trade enterprise carries out the business of "false self-operation real agent" model, the objective evidence can show that it has not reached a tax fraud with the perpetrator of the tax fraud, then it does not have the direct intent to actively pursue. Therefore, the point of contention in such cases is whether the foreign trade enterprises have indirect intent to cheat tax.

In practice, if a foreign trade enterprise implements the illegal behavior of "false self-operation real agent" model, but subjectively, it is to earn profit from agency fees, and objectively, it adopts some supervisory measures to prevent the occurrence of tax fraud, generally speaking, it can prove that subjectively, it does not have the purpose of letting the tax fraud perpetrator implement the tax fraud, and at most, it has the following reasons There are deficiencies in the supervisory system, which belongs to negligence. Therefore, the foreign trade enterprises can actively defend themselves from this aspect, especially providing evidence and information that can prove that they have examined the authenticity of contracts, invoices, business and goods, so as to overthrow the accusation of "indulgence" or "knowledge" made by the public prosecutor against the foreign trade enterprises.

Ⅳ. Foreign trade enterprises should be alert to the "false self-operation real agent" model of export tax rebate risk

(I)The risk that "false self-operation real agent" model shall not apply the tax refund and exemption policy.

Under the "false self-operation real agent" model, the export enterprise apparently exports in the name of self-management, but in fact the whole export process is operated by other subjects (actual exporters). This practice makes it difficult for the tax authorities to accurately monitor the real export transactions and increases the risk of export tax fraud. Therefore, according to the Circular of the State Administration of Taxation and the Ministry of Commerce on Further Standardizing the Order of Foreign Trade Export Operation and Effectively Strengthening the Management of Tax Refunds (Exemptions) for Exported Goods (Guoshifa 〔2006〕 No.2), if an exporting enterprise exports in the name of self-supporting, but in reality, the business is actually operated and completed by other enterprises or individuals, or if the same batch of goods is subject to both a purchasing contract and an agent's contract for exporting, etc., upon discovery of this The tax refunded (exempted) for the business will be recovered, and the tax not refunded (exempted) will not be processed again.

In addition to not being allowed to handle the tax refund (exemption), according to the "Notice 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 export enterprises implementing the "false self-operation real" agent model will also be subject to the policy of value-added tax (VAT) collection, which means that they need to pay VAT output tax on exported goods as if they were for domestic sales. That is to say, they need to pay the output VAT on exported goods as if they were domestic sales. For the export enterprises, in the "false self-operation real agent" model, they only earn a small amount of agency fees, and the export tax rebates are shared with the actual exporters, so once they are subjected to tax audits, they will face a huge amount of tax reimbursement obligations.

(ii) The risk of administrative penalty of suspected tax cheating

The Circular of the State Administration of Taxation and the Ministry of Commerce on Further Standardizing the Order of Foreign Trade Export Operation and Effectively Strengthening the Management of Tax Refund (Exemption) for Exported Goods (Guo Shui Fa 〔2006〕 No.2) stipulates that if an export enterprise carries out the behavior of "false self-operation real agent" model which constitutes the act of obtaining tax refund by cheating export tax, the enterprise will be investigated for the administrative and criminal responsibility of tax cheating in accordance with the law. Among them, it is necessary to particularly remind the majority of export enterprises that, although the administrative violation and criminal offense of cheating export tax rebate maintain consistency in the main constituent elements, but due to the administrative penalty to the tax authorities of the standard of proof, especially the subjective elements of the proof of the obligation is relatively low, so even if the export enterprises do not constitute the criminal law crime of cheating export tax rebate, they may also constitute the tax law cheating export tax rebate, thus facing administrative penalty of 1-5 times of the export tax refund.

(iii) The risk of constituting an accomplice to tax fraud

As mentioned above, although the Judicial Interpretation of the Two High Commissions deleted Article 6 of the Judicial Interpretation of Tax Fraud of 2022 regarding the tax fraud provision of "four self and three no see", Article 19, "Knowing that another person has committed a crime of jeopardizing the tax collection and management and still provides him with an account number, a certificate of credibility, or other assistance, shall be punished as an accomplice to the corresponding crime". However, Article 19 "If a person knows that another person has committed a crime against tax administration and still provides him with an account number, credit certificate or other assistance, he shall be punished as an accomplice to the corresponding crime" still stipulates in principle that the joint crime shall be dealt with according to law. If the export enterprise implements the "false self-operation real agent" model of helping behavior, subjectively and the actual tax cheaters form a joint criminal intent, then it constitutes an accomplice to tax cheating, and still faces criminal liability, so its criminal risk still exists and should not be underestimated.