Editor's Note: The renewable resources, coal and other industries are generally natural persons and self-employed. Because natural individual retail investors cannot issue special VAT invoices, production enterprises usually add trading companies into the purchase and sale chain to realize their rights and interests deduction, and obtain special VAT invoices from trading companies. After the judicial interpretations of the two taxes were promulgated, some local courts held that the above situation was that the production enterprise realized the input deduction of the business that could not be deducted according to law through the fictitious trading company, which was a fictitious trading entity and constituted the crime of falsely issuing special invoices for value-added tax. Is the business model of the above-mentioned industries such as renewable resources a "fictitious transaction subject"? How to characterize trading companies and downstream production enterprises for the adjustment of business model with real transactions? This article will discuss this.

I. Case: because the natural person retail investors can't issue special tickets, it is a fictitious transaction subject to obtain invoices from trading companies by using the adjustment mode of waste enterprises.

In a criminal judgment of a court, natural person retail investors own the source of waste materials, but because they can't issue special VAT invoices and don't meet the supplier requirements of joint waste enterprises, they contact Company A to sell waste materials to waste enterprises through Company A, and part of their business is that waste enterprises can't obtain invoices by themselves, so they contact Company A to participate in the purchase and sale. In the course of business development, Company A settles accounts and issues invoices with waste enterprises according to the weighing sheets and settlement sheets provided by waste enterprises.

The public prosecution agency accused the relevant personnel of Company A of falsely issuing special VAT invoices for others, which constituted the crime of falsely issuing special VAT invoices. The court held that the waste enterprises actually purchased waste materials from retail investors at a price excluding tax, and the countries in this link did not collect taxes; However, because retail investors do not have the qualification to issue special VAT invoices, waste enterprises can't obtain invoices to realize the deduction. Retail investors or waste enterprises fictitious Company A into the purchase and sale business, so that Company A can falsely issue special VAT invoices for waste enterprises and waste enterprises can obtain input invoices. Through this fictitious transaction subject with no reasonable commercial purpose, Company A can realize the deduction of VAT input tax by issuing special VAT invoices, thus reducing the actual VAT payable by waste enterprises. Finally, it is determined that the relevant personnel of Company A constitute the crime of falsely issuing special VAT invoices.

In industries such as renewable resources, coal, logistics and transportation, it is common that the sources are mostly natural persons and self-employed, especially in the fields of scrap steel, waste non-ferrous metals, coal, etc., the annual sales of retail investors are often millions, but in practice, most retail investors do not register as market entities or tax, and trade with buyers as natural persons, so they cannot issue or apply for issuing special VAT invoices for buyers. In practice, production enterprises such as waste enterprises, coal washing plants or power plants often join trading enterprises in the purchase and sale chain, and such enterprises participate in the purchase and sale, and obtain special VAT invoices from other places. For the adjustment of this business model, there are views in judicial practice. For example, the court held that the natural person retail investors are not qualified to issue special VAT invoices, and the purchase and sale transactions they have are businesses that cannot be deducted according to law, while the downstream production enterprises fictionalize trading companies into the purchase and sale chain, which means that the businesses that cannot be deducted according to law can be invoiced and the input tax can be deducted through such fictitious trading entities as trading companies, which is a fictitious transaction subject type and constitutes a crime of false opening. Under this recognition, trading companies and downstream production enterprises are facing the risk of false criminal responsibility. Then, is the sales business of natural person retail investors a business that cannot be deducted from taxes according to law? Does the above situation belong to the fictitious transaction subject type, and does the trading enterprise and downstream production enterprise constitute the crime of false opening?

II. What is the fictitious transaction subject?

In March last year, the Interpretation of the Supreme People's Court the Supreme People's Procuratorate on Several Issues Concerning the Application of Laws in Handling Criminal Cases Endangering Tax Collection and Management (Fa Shi [2024] No.4) revised the crime of falsely issuing special invoices for value-added tax. "In any of the following circumstances, it shall be deemed as" falsely issuing special invoices for value-added tax or other invoices for defrauding export tax refund or tax deduction "as stipulated in the first paragraph of Article 205 of the Criminal Law: (1) Issuing value-added tax without actual business. (2) Having actual deductible business, but issuing special invoices for value-added tax that exceed the tax corresponding to the actual deductible business, and other invoices for defrauding export tax rebates and deducting taxes; (3) Issuing special invoices for value-added tax and other invoices for defrauding export tax rebates and tax deduction through fictitious trading entities for businesses that cannot be deducted according to law; (4) Illegally tampering with electronic information related to special invoices for value-added tax or other invoices used for defrauding export tax rebates and tax deduction; (five) in violation of regulations by other means ".

In the article Understanding and Application of "Two Highs" and "Explanations on Several Issues Concerning the Application of Laws in Handling Criminal Cases Endangering Tax Collection and Management", the Supreme Law summarized the above situations as "false opening without goods", "false opening with goods", "fictitious transaction subject" and false opening with electronic information by tampering with invoices. For the "fictitious transaction subject-type false opening" discussed in this paper, it is first necessary to clarify what is the business that cannot be deducted from taxes according to law. Except that the input tax amount of goods or services purchased for collective welfare or personal consumption is not deductible as stipulated in the Provisional Regulations on Value-added Tax, according to the principle of value-added tax, businesses that cannot deduct tax according to law should cover the situation that the deduction chain of special VAT invoices is terminated, that is, the related goods or services will not flow downstream again, and the buyer will become the ultimate taxpayer in the chain. If the deduction chain is improperly extended, the input deduction chain that should have been terminated will be restarted and grafted to other business chains to offset the output tax amount generated by another business.

In practice, this kind of business that can't be deducted from tax according to law through fictitious transaction subject is common in the false issuance of surplus tickets. For example, in industries such as electronic products, clothing, catering, etc., the customers faced by sellers are often terminal individual consumers, that is, the final taxpayers in the special VAT invoice chain. The deduction chain of value-added tax ends at individual consumers, and the actual tax burden borne by consumers who buy goods or services from sellers based on tax-included prices belongs to the business that can't be deducted from tax according to law. On the other hand, some enterprises take advantage of the characteristic that individual consumers don't want tickets, and issue the surplus input tax to the recipient enterprise, that is, the "fictitious transaction subject", which improperly extends the VAT chain that should have been terminated and actually bears taxes through the form of fictitious subject, and the recipient enterprise obtains false VAT invoices and deducts the VAT tax that should not have been deducted.

In the context of this article, the situation that natural person retail investors can't issue special VAT invoices to buyers does not belong to the "business that can't deduct taxes according to law" referred to in the judicial interpretation of the two high taxes. On the one hand, there is a real purchase and sale transaction between natural person retail investors and downstream enterprises, and the downstream enterprises have obtained the value-added tax input deduction rights according to law based on the tax-included price. Retail investors should issue invoices to them only because their main identity does not meet the conditions for issuing special invoices for value-added tax, and the illegality of the vouchers does not mean that the relevant businesses cannot deduct taxes; On the other hand, as mentioned above, "business that cannot be deducted according to law" refers to the business in which the VAT deduction chain is terminated, and retail investors are not the ultimate taxpayers in the chain. For example, in the coal industry, individual coal miners sell coal to trading companies or downstream enterprises such as coal washing plants and power plants without tickets after mining, and go through many value-added links such as trade and production in the middle. The VAT chain should be invoiced layer by layer and deducted by ring in the above links, and individual coal miners are not the most terminal subjects of the VAT chain. Therefore, the behavior of adjusting the supply mode of retail investors and obtaining invoices from trading enterprises should not be evaluated as "fictitious transaction subject".

III. Prevention and control of criminal risks: strive for innocence or light crime by combining the evidence on file and the application of law.

In practice, there are also views that the behavior of downstream production enterprises to adjust the supply mode belongs to the behavior of "falsely opening goods", that is, "there is actually deductible business, but special invoices for value-added tax are issued that exceed the tax corresponding to the actual deductible business, and other invoices are used to defraud export tax rebates and deduct taxes". It is believed that production enterprises purchase goods at tax-free prices, and then obtain invoice declaration and deduction from trading enterprises. In this case, Because the production enterprise does not actually bear the tax burden of the previous link, it cannot enjoy the right of deduction, so the production enterprise obtains the invoice from the trading enterprise in essence to reduce its own cost by taking the national value-added tax, which should constitute a crime of falsely making out. The above viewpoints lead to the great risk of falsely making criminal liability in practice for trading enterprises and downstream production enterprises. We believe that in the face of the accusation of falsely making a crime, trading enterprises and production enterprises can strive for innocence or light crime from the following points:

For trading enterprises, first, we can discuss the rationality and legitimacy of this trade model in combination with the actual situation of the industry, such as advance payment, bearing the risk of cargo damage and so on; Second, it can be explained that trading enterprises actually participated in the purchase and sale business in combination with the evidence on file, and at the same time, the legality of delivery methods of goods rights such as one-stop transportation can be discussed; Thirdly, combined with the crime clause, it is discussed that under the condition of real purchase and sale transactions, trading enterprises have no intention of defrauding the state tax, and have not caused the tax to be cheated. For the case of financial return, finance and tax should be distinguished, and the financial return obtained should not be defined as tax loss.

For production enterprises, first, it can be discussed that they have obtained the right to deduct value-added tax according to law based on the real purchase business by combining the principle of tax law; Second, according to the actual situation of the case, it is discussed that there are real goods transactions, and the invoices obtained do not exceed the actual deductible tax; Third, combined with the provisions of the crime, it is discussed that the enterprise has no purpose of defrauding the tax and has not caused the state tax to be defrauded, which should not constitute the crime of falsely issuing special VAT invoices. In the case of actually paying the goods and obtaining the goods, it is only because the retail investors cannot issue special VAT invoices, and the tax on the invoices does not exceed the actual tax deductible, so it cannot be deducted according to law. Its purpose is not to defraud the state tax, but to not pay more taxes and will not cause the tax to be defrauded.

IV. Summary

In renewable resources, coal and other industries, the sources are mostly scattered individuals. The reasonable and legal adjustment of business model by downstream production enterprises does not necessarily lead to the suspicion of fraudulent tax. In the case of real purchase and sale business, downstream production enterprises adjust the business originally purchased from retail investors to purchase and sale transactions with trading companies, obtain invoices issued by them, and deduct VAT input and income tax before tax, which will not cause national tax losses and should not be considered as fraudulent tax. The tax law should strictly abide by the principle of tax neutrality, and should not treat the diversified economic activities in a one-sided and fragmented way, and should carefully judge the behavior of issuing and receiving tickets with real transactions.