Editor's Note: The two high tax-related judicial interpretations for the crime of false invoicing set up the crime of no fraudulent tax purpose and no fraudulent loss of tax money, which has made a significant contribution to limiting the criminal circle of this crime. At the same time, what kind of crime should be constituted by the false invoicing behavior without the purpose of tax fraud and without causing fraudulent loss of tax money, and what crime should be applied have become the hot topic of discussion in the practical world. This article combines a case of false invoicing of refined oil products on behalf of the author, proposes that this kind of situation can be applied to one of the adjudication paths of the crime of false invoicing under Article 205 of the Criminal Law, and analyzes that the object of the crime of false invoicing can include VAT invoices according to the provisions of the Criminal Law.

I. Introduction of the case: a petrochemical company to change votes to avoid consumption tax case

The main facts of the petrochemical bill change case represented by the author can be summarized in the above diagram. In the above chart, company A is the component oil supplier, company B is the invoicing enterprise is also the leading unit of gasoline production in the chain, company C is the invoicing party, company D is the invoicing enterprise company B's partner with gasoline production capacity. company B purchases the component oil from company A, company A according to the instructions of the company B will be transported directly to the company D, the company D in the direction of company B, production and processing of gasoline. Company B obtains invoices for chemical raw materials directly from Company A, but does not issue invoices for gasoline directly, but issues invoices for chemical raw materials to Company C, which changes the name of the product to gasoline and then issues invoices for gasoline to Company D, which then matches the gasoline with the goods and sells them to the outside world.

In the investigation stage of this case, the investigating authorities to B company suspected of false invoicing crime investigation. In the examination and prosecution stage of the case, the author proposed to the procuratorial authorities that Company B constitutes the crime of tax evasion and false invoicing at the same time the crime of several competing defenses, because of the lack of tax evasion in this case, the administrative preconditions, according to the false invoicing crime of criminal responsibility. The defense opinion was accepted by the procuratorate, which then prosecuted Company B for the crime of false invoicing. Eventually, the court ruled that Company B constituted the crime of false invoicing and held it criminally liable. One of the notable highlights of the judgment is that the court held that the object of the crime of false invoicing could include VAT invoices, and the context of Article 205(1) of the Criminal Law could well lead to this conclusion.

In the judicial practice of criminal cases of false invoicing, there has been such a controversy, that is, if the object of false invoicing is VAT invoices and the behavior of tax deduction, whether it can constitute the crime of false invoicing. In this regard, it is necessary to analyze and judge under the guidance of the principle of subject-object consistency and appropriateness of crime and punishment, and the systematic interpretation of Article 205 and Article 205 of the Criminal Law, supplemented by the second paragraph of Article 10 of the two Higher Judicial Interpretations on Taxation.

II. Not guilty of false invoicing and tax credits, although there are false invoices and tax credits

The second paragraph of Article 10 of the Judicial Interpretation of the Two High Commissions on Taxation stipulates that "if the purpose of fraudulently offsetting taxes is not to increase the performance, financing, or lending, and no fraudulent loss of taxes is caused by the offsetting, the crime shall not be punished, and if it constitutes any other crime, the criminal responsibility shall be investigated for other crimes according to law." Accordingly, even if the perpetrator has the behavior of false invoicing and tax deduction, if the perpetrator subjectively does not have the purpose of cheating tax and objectively does not cause the consequences of fraudulent loss of tax, it still may not constitute the crime of false invoicing.

(i) From the viewpoint of subjective purpose, the perpetrator did not have the purpose of fraudulently offsetting the VAT, but rather to evade the consumption tax.

In the aforementioned case, Company B's purpose was to evade consumption tax, not to cheat the national VAT tax. Observing the whole business chain, Company B detached the invoice-changing link from the production link by adding the invoice-changing party, Company C, so as to present a pure trading behavior on its books instead of a production behavior, thus achieving the purpose of evading consumption tax.

Although Company C changed the invoice name of chemical raw materials to gasoline, it was only a change of the name of the goods. During the whole transaction process, there were real transactions of goods between the companies, and the quantity of goods, the amount of payment for the goods, and the VAT rate involved in obtaining and issuing the VAT invoices were all in line with the actual transaction situation. At the same time, the companies paid the corresponding VAT on time and in full and did not evade any VAT payment obligations. All the objective facts showed that Company B did not have the purpose of obtaining VAT tax fraudulently and did not have the subjective elements constituting the crime of false invoicing.

(ii) From the point of view of the principle of taxation, the full amount of credits and payments at all stages did not result in fraudulent VAT losses.

The act of false invoicing will not cause VAT loss per se. VAT is a kind of turnover tax levied on the basis of value-added amount generated in the process of circulation of goods, services and taxable acts. As long as the chain of VAT deduction is not broken, the negative VAT will be shifted from one layer to another and be borne by the final consumers. At the same time, VAT is an out-of-the-money tax. A taxpayer purchases goods and pays the price to the supplier of the goods, which includes the price of the goods (i.e., excluding tax) and the amount of VAT (i.e., the amount of input tax), and the sum of the two is the total amount of the price and tax. When a taxpayer purchases goods, pays input tax and obtains input invoices in accordance with the law, the taxpayer obtains the right to input tax credit in accordance with the law.

Assuming that the business chain in the aforementioned case is "Company A - Company B - Company D", each link is invoiced at equal price, the transaction is equipped with real goods, Company B purchases raw materials from Company A and then sells them to Company D, and each party pays full tax and deduction, which will not cause the state VAT fraudulent loss. The state VAT was fraudulently lost. Although adding 1 company, 10 companies, 100 companies between Company B and Company D, creating "Company A - Company B - Company C1 - Company C2 .... -C100 - Company D", the State's VAT is not lost. The reason is that, even if a new false transaction link is created in this chain, the act of false invoicing constitutes a proposed tax obligation rather than a statutory tax obligation, and the will of the state neither advocates the actor to pay the tax nor allows the actor to offset the tax, and the result of the actor's paying full tax and offsetting the tax in full is actually the same as that pursued by the will of the state. Therefore, as long as the parties in the fictitious transaction link offset the tax with full tax declaration, it is impossible to produce the substantive harmful result of cheating the state tax.

Assuming that the above business chain "Company A - Company B - Company C1 - Company C2 .... -C100 Company-Company D" is not invoiced at par, and each fictitious link of Company C is increased by 1 yuan, for the final Company D, its input tax credit includes the real input of the upstream suppliers and the fictitious input of the intermediate links. For the real inputs, its deduction behavior will not cause tax loss; for the false inputs, since each link also pays full tax, its deduction behavior will not cause tax loss. The whole process does not result in fraudulent VAT payments.

Therefore, we can see that, in practice, similar to the behavior committed by Company B, although it has the behavior of false invoicing and tax deduction, but subjectively there is no purpose of fraudulent offsetting of VAT and objectively there is no fraudulent loss of VAT, which does not constitute the crime of false invoicing according to the provisions of Article 10(2) of the two Higher Judicial Interpretations on Taxation.

III. False invoicing that does not constitute the crime of false invoicing may be punished in accordance with the crime of false invoicing

The aforementioned false invoicing behavior without the purpose of tax fraud and without the consequences of loss of tax fraud, since it does not constitute the crime of false invoicing, can be dealt with in accordance with the crime of false invoicing.

According to one of the provisions of article 205 of the Criminal Law, the crime of false invoicing refers to the act of a perpetrator who intentionally falsely issues invoices other than those stipulated in article 205 of the Criminal Law under aggravating circumstances. If the provisions of "other than those stipulated in Article 205 of the Criminal Law" are understood only literally, it will be considered that the act of false invoicing does not meet the constitutive elements of the crime of false invoicing, and it will also be considered that the object of the crime of false invoicing does not include VAT invoices, which in fact means that the crime of false invoicing is understood as the crime of "false invoicing of ordinary invoices". the crime of false invoicing of ordinary invoices". The above views are obviously the wrong understanding and application of this law. The key to the problem lies in how to understand the phrase "other than those stipulated in article 205 of the Criminal Law" in one of the articles of the Criminal Law.

Professor Richard Chang's article "On Apparent Constituent Elements" points out that "certain elements explicitly stipulated in the criminal law are not intended to provide a basis for illegality or culpability, but only to differentiate the boundaries of related crimes (including different standards of punishment for the same crime). Such constituent elements are referred to as 'apparent constituent elements' or 'false constituent elements', and may also be referred to as demarcation elements. From the point of view of substantive law, these superficial constituent elements are not elements that must be present to establish an offense; from the point of view of procedural law, superficial constituent elements are elements that do not need to be proved."

Accordingly, the phrase "other than that provided for in article 205 of the Criminal Law" is a superficial element or boundary element rather than a true constituent element. That is to say, any act of false invoicing meets the constituent elements of the crime of false invoicing and thus constitutes the crime of false invoicing. VAT special invoice also belongs to one kind of invoice, if the perpetrator falsely opens special invoice but does not implement the act of cheating offset and does not cheat offset VAT payment intentionally, only the crime of false invoicing is established. From this point of view, the criminal object of the crime of false invoicing certainly cannot exclude the VAT special invoices, but can include the VAT special invoices, i.e. the VAT special invoices which are not used for fraudulent offsetting of VAT can be established as the criminal object of the crime of false invoicing.

Prof. Chen Xingliang's article "The Crime of False VAT Invoice: Nature and Definition" also shares the author's viewpoint. Prof. Chen Xingliang pointed out that the word "stipulated" in "other than stipulated in Article 205 of the Criminal Law" means "stipulated as a crime". "VAT invoices falsely issued for the purpose of cheating national tax have been criminalized by Article 205 of the Criminal Law, and of course cannot constitute the crime of false invoicing. However, the act of falsely issuing special invoices not for the purpose of cheating the state tax has not been stipulated as a crime by Article 205 of the Criminal Law, and it can still be included in one of the constituent elements of falsely issuing other invoices under Article 205 of the Criminal Law. For the false invoicing that does not aim at cheating the state tax, although it cannot be criminalized as false invoicing, it can be fully recognized as the crime of false invoicing."

In the case introduced by the author, the court ruled that Company B constituted the crime of false invoicing, precisely following the viewpoint of Prof. Zhang Mingkai's "superficial constituent elements". The judgment pointed out that "the crime of false invoicing refers to the act of a perpetrator who intentionally falsely issues invoices other than those stipulated in Article 205 of the Criminal Law under serious circumstances. The phrase 'other than those stipulated in Article 205 of the Criminal Law' belongs to the boundary elements rather than the constituent elements, and VAT invoices also belong to a kind of invoice; the perpetrator falsely issued VAT invoices but did not commit the dangerous act of fraudulently obtaining tax deductions, and should be convicted and punished for the crime of falsely issuing invoices."

IV. Conclusion

The penalty shall be appropriate to the crime committed and the criminal responsibility assumed by the perpetrator, and its basic requirements are usually expressed as heavy punishment for serious crimes, light punishment for minor crimes, impunity, punishment for the crime, and equal punishment for the crime. If the perpetrator does not subjectively have the purpose of cheating the state value-added tax and objectively does not cause the consequence of loss of value-added tax, but carries out the act of false invoicing for other purposes, it does not constitute the crime of false invoicing. If the perpetrator has the behavior of false invoicing, but does not use the function of invoicing to offset the national VAT interests, but the general invoices also have the function of proving the economic activities, there is no substantial difference between false invoicing and false invoicing, and from the consideration of the principle of the appropriateness of crime and responsibility and punishment, the crime of false invoicing shall be punished for the seriousness of the circumstance.

In practice, it is difficult and controversial to identify cases of false opening. In the context of the implementation of the two high tax-related judicial interpretations, some cases may usher in a new turnaround. Whether in the early stage of tax disputes or in the process of entering the trial of criminal offenses, professional tax lawyers play a vital role and even become the key to victory. When a company faces a tax dispute, it is recommended to hire a professional tax attorney to intervene early. Tax lawyers can analyze the conflict of laws, legal interpretation, the ability to prove the evidence and the burden of proof and other legal perspectives, communicate effectively with the tax authorities and judicial organs, provide professional tax-related services, safeguard the legitimate rights and interests of the parties as far as possible, and effectively resolve and prevent tax risks.