In 2022, in order to encourage the development of foreign trade economy in the face of the unusually complex international situation, the state still implemented a strong export tax rebate policy. During this period, the State Administration of Taxation (SAT) has repeatedly "speeded up" the process, requesting to further shorten the approval period for tax rebates and reduce the information for tax rebate applications, so as to ensure that the tax rebate funds will benefit the enterprises and reduce the financial pressure on the enterprises. In order to prevent lawbreakers from fraudulently obtaining export tax refunds, tax authorities have joined forces with public security, customs, foreign exchange and other departments, utilizing information technology to continuously improve the strength of the crackdown on fraudulent export tax refunds.2022, the risk of tax fraud is mainly concentrated in the agricultural products, textiles and garments, precious metals, and software technology industries, with a number of cases erupting. This article explains the compliance countermeasures for foreign trade exports by analyzing the patterns and risk points of the four major industries.

I. Agricultural products acquisition invoice self-filling self-counterbalance, easy to trigger the risk of tax fraud

(I) the acquisition invoice of the supplier enterprise is not compliant, the export enterprise is implicated

The reason why foreign trade enterprises repeatedly face high tax-related risks lies in the production and distribution of goods through a number of links, thus exacerbating the possibility of the outbreak of tax-related risks. In the process of applying for tax refund for export of goods, the tax authorities of tax refund need to audit whether the goods are tax compliant in the domestic production or purchasing process, and whether the VAT has been paid in full. For the first time to apply for tax refund, or the exported commodities belong to risky commodities, the tax authorities will also send letters to the upstream trading and production enterprises for on-site verification. If the invoices of the supplying enterprises are problematic or even falsely issued, then it will lead to the suspension of tax refund for the exporting enterprises, or constitute fraudulent export tax refund.

Due to the characteristics of the self-filling and self-counterbalancing of the invoice for the purchase of agricultural products, it is easy to be utilized for false opening. There are two main types of non-compliance behavior of the supplying enterprises:

The first is that the supplier enterprises in the procurement of agricultural products, did not fill out the purchase of agricultural products invoices in a timely manner, but centralized procurement after the aftermath of "to make up", resulting in the purchase of agricultural products invoices and the actual transaction information does not match. Some supply enterprises commissioned some of the agricultural products origin of large households, individuals on behalf of the purchase, these large households, individuals to facilitate the provision of false information on farmers, resulting in the purchase of agricultural products invoice information and the actual inconsistency.

The second type is that, in order to reduce its own tax burden, the supplying enterprise intentionally fills in the agricultural products purchase invoice falsely and improves the items and costs in order to evade VAT and enterprise income tax.

No matter which of the above behaviors, if once the risk breaks out, the supplying enterprise is very easy to be recognized as false entry and false opening, which will implicate the exporting enterprise, and the exporting enterprise will be recovered the export tax rebate because of obtaining the falsely opened VAT invoices.

(II) Utilizing agricultural products as "props" and exporting tax fraud in a circular manner

Due to the high export tax refund rate of mushrooms, fungus, tea and other agricultural products, and the goods are easy to keep and carry, thus they are utilized for "circular export" tax fraud. The specific behavior pattern is: the domestic export enterprises and foreign enterprises to enter into a false foreign trade contract, the agricultural products will be exported to Southeast Asia and other regions bordering our country. After the agricultural products are exported across the border, the overseas enterprises do not actually take delivery of the goods, but rather bring the agricultural products into the country in batches at the border through the policy of "border market" customs clearance and tax exemption, and then continue to be exported. Ultimately, the purpose of utilizing a batch of agricultural products and applying for multiple export tax rebates is achieved.

The hidden nature of circular export tax fraud lies in the fact that, in general, the acts of tax fraud, such as buying orders, the export enterprise itself does not have the real goods, so the customs in the audit, if found that the transport documents, customs declaration and the actual goods are inconsistent with the situation, then the clues of tax fraud will be found. However, such cases are based on the real goods as props, so it is difficult to find problems when the Customs inspection only do the audit of whether the single goods are consistent.

However, due to the border market through the "second" into the domestic agricultural products without input invoices, so such behavior also had to open the agricultural products purchase invoices through the way of false "with the ticket". If the risk of invoicing breaks out, the chain of tax fraud will be investigated and dealt with.

(III) "Buying and Matching Invoices" through Agricultural Products Acquisition Invoice as the Source of False Invoicing

Buying single matching invoice refers to some agent customs declaration and transportation enterprises mastering the information and customs declaration of a batch of duty-free commodities, selling the information of goods to export enterprises, and export enterprises applying for export tax rebate by forging corresponding contracts and issuing false invoices, so as to package the duty-free commodities into tax-refundable commodities. In this link, the exporting enterprises need to let the third party issue false invoices for them, and the invoicing party thus lacks input. Some invoicing enterprises will fill the lack of inputs by falsely issuing invoices for the purchase of agricultural products. These invoicing enterprises are mostly shell enterprises, and once the risk breaks out, it will directly affect the export enterprises.

II. Counterfeit precious metal form, change non-refundable goods for refundable goods

(I) Counterfeit gold, silver for high-tech products to cheat export tax rebates

The basic pattern of such cases is relatively consistent. As gold, silver and other precious metals belong to the national restrictions on the export of goods, do not enjoy the tax rebate (exemption) policy, the export enterprise should pay the full amount of value-added tax at the time of export. Therefore, some unscrupulous elements will try to change the "form" of precious metals, packaging precious metals into high-tech materials containing precious metals, such as circuit boards, wires, etc., exported through the name of high-tech commodities, in order to obtain the export tax rebate (or even a high rate of tax rebate). But in fact, the goods do not have any high-tech, just simple processing, after the exit of the precious metals will be disassembled and sold, and other materials will then flow into the country through smuggling or importation, and continue to participate in tax fraud activities.

(II) Characterization of tax fraud on precious metals: does tax fraud constitute smuggling?

Re-qualification, such behavior is firstly due to the fraudulent export tax rebate funds, thus constituting the crime of export tax rebate, there is no doubt in practice. However, some courts believe that the behavior at the same time constitute the crime of smuggling precious metals, several crimes and penalties, in order to achieve heavier criminal sanctions. In this paper, according to the theory of criminal behavior, in order to achieve a criminal purpose, in the process of committing a crime, the means or results of the crime at the same time, other crimes, belong to the "guilt by association", unless the criminal law explicitly stipulates that the crime should be criminalized and sentenced to the crime committed. In the act of tax fraud in precious metals, smuggling precious metals is the means of tax fraud, is part of the entire tax fraud, should be fraudulent export tax rebates to pursue criminal liability, should not be punished with several crimes.

III High export tax rebate rate of textile and garment products has become the "disaster area" of tax fraud

(I) the main mode of textile and garment foreign trade tax fraud
China is the world's largest producer and exporter of textiles and clothing, in order to encourage the export trade of textiles and clothing, China in the textile and clothing industry to give a high export tax rebate rate policy support. Therefore, in order to cheat the export tax rebate, textile and garment field successive tax fraud cases, and large scale, high amount, long chain, affecting many provinces and cities, showing the characteristics of the whole chain.

At present, the lawbreakers are mainly concentrated in the middle of the chain, that is, the lawbreakers control the shell garment production enterprises located in the middle, and the downstream foreign trade companies, customs clearance companies, freight forwarding companies to contact each other, buy export documents and related information; from the upstream enterprises to buy false input invoices or false purchase invoices of agricultural products. In addition, some criminals will also use the export enterprises to cheat taxes, that is, claiming that they bring their own sources of goods, customers, and only need to use the export enterprise's right to export tax refunds, i.e., the "four from the three don't see" mode.

The main modes of using textiles and clothing to cheat export tax rebates are two. The first is "substandard", "low value and high reporting", that is, through camouflage and packaging, will not be able to tax rebates forged into commodities can be refunded, the value of low-value remnants of counterfeit into high-value commodities, raising the price of goods, access to false export value. Due to the production process, the source of procurement in the customs link is difficult to verify, has a strong deceptive. The second is the "purchase order with goods" mode.

(II) textiles and garments and other products with high export tax rebate rates are the focus of supervision

In recent years, the tax authorities have achieved good results in the field of combating tax fraud through high-tech means and the use of tax big data. For example, if an export enterprise generates explosive growth in its export amount, and the goods are single and belong to risky commodities, it will cause an early warning from the tax system and initiate a tax inspection. At present, some tax authorities have already conducted tax inspections on the "growth rate of export amount", "customs declaration in other places", "rate of importing goods in other places", "collection and settlement status" and "transportation and settlement status". "and "transportation and warehousing costs", thereby preventing and curbing tax fraud in a timely manner.

IV. Software technology enterprises to use the "instant tax refund" policy to fraudulently obtain export tax refunds

(I) Software technology fraudulent tax incentives, false opening, fraudulent export tax rebates integrated

In this kind of cases, the lawless elements firstly establish software enterprises in areas with preferential policies, purchase some defective and low-value chips, transmitters, wires and other materials, process them into "high-tech products" with no actual function and extremely low value, and then sell them to the export enterprises, issue VAT invoices with the name of software, and apply for the "software products VAT instant refund" policy. Then sell them to export enterprises, issue VAT special invoices with the name of software, apply for VAT instant refund for software products, and cheat tax preferences. The export enterprises which purchased the "high-tech products" will then falsely export the products through ticket allocation, forged contracts, etc., to cheat the national export tax rebate. In addition, the lawless elements also use some export enterprises, agents or self-managed export of such "high-tech products", thus involving the regular export enterprises!

(II) software industry to strengthen the prevention of fraudulent tax incentives, the risk of fraudulent export tax refunds

In order to encourage the development of the software industry, the Circular of the Ministry of Finance and the State Administration of Taxation on the Value-added Tax Policy on Software Products (Cai Shui [2011] No. 100) stipulates that a general taxpayer who sells its self-developed and produced software products shall implement the policy of immediate tax rebate on the portion of the actual value-added tax burden of the value-added tax that is more than 3% after the value-added tax is levied at a tax rate of 17% (now at 13%). As a result, some enterprises appeared to cheat the tax benefits by means of false software sales business, or inflating the price of software. With the increasing complexity and chain extension of such cases, the integration of fraudulent software product tax incentives, false VAT invoices and fraudulent export tax rebates has emerged. In this case, export enterprises may be deceived and export these "high-tech products" on their own behalf or through their own agents, thus being involved in the risk of fraudulent tax invoicing.

V. Summary

Export enterprises are alert to the risk of tax fraud, multiple means to protect their rights and interests
In practice, it is not difficult to see that some regular export enterprises are implicated in cases of fraudulent export tax rebates because of non-compliance in business, and eventually suffer financial losses, have their tax credit ratings downgraded, and have their right to export tax rebates suspended. Therefore, when carrying out export tax rebates, export enterprises should pay attention to the verification of the source of goods to prevent the risk of fraudulent export tax rebates. If the risk breaks out, they should actively respond to it.

(I) Agricultural products acquisition invoices are risky and should focus on compliance
As mentioned above, there are always agricultural products in the chain of tax fraud, so for the source of goods belonging to agricultural products, enterprises should be vigilant to ensure that the acquisition of agricultural products invoice compliance. For example, exporters can verify whether the location has the capacity to produce certain agricultural products. In addition, in the acquisition of agricultural products, enterprises should also focus on the process of compliance, do not rely too much on the local farmers, for the farmers provided by the farmers information, but also to ensure that the verification.

In practice, there is also a category of situations. Previously, the Notice of the Yunnan Provincial Taxation Bureau of the State Administration of Taxation on Issues Related to the Management of Agricultural Products Acquisition Invoice (Yunshifa [2018] No. 157) had stipulated that taxpayers purchasing agricultural products from individuals within the scope of Yunnan could not obtain VAT invoices from the seller, and could issue VAT ordinary invoices on their own in accordance with the regulations, and no longer required that taxpayers purchasing agricultural products had to be the agricultural producers personally selling their It is no longer required that taxpayers purchasing agricultural products must be agricultural producers selling their own products for self-sale in order to issue invoices for purchase of agricultural products. According to this provision, Yunnan Province has recognized the situation of "issuing ordinary VAT invoice by oneself", which is mainly applicable to the situation that the purchaser entrusts the large household to collect and purchase agricultural products, but the large household does not produce agricultural products for individuals and is unable to issue invoice for the purchase of agricultural products. However, this normative document of low rank, low effectiveness, if the inter-provincial, more than not recognized by the tax, public security, and thus there is a risk of false invoicing, worthy of vigilance of export enterprises.

(II) Avoid "fake self-management, real agent" and "four from three missing" and other illegal business
"Fake self-management, real agent" has been prohibited by the tax authorities, if found, not applicable to export tax rebate policy, but as domestic sales tax. However, the behavior of "fake self-management, real agent" does not necessarily constitute the crime of fraudulent export tax rebate in criminal law. The difference lies in the fact that the reason why the tax authorities prohibit the behavior of "fake self-management, real agent" is mainly because the enterprise actually exporting the goods can avoid and divert the tax by letting the other enterprises export. The main reason why the tax authorities prohibit the behavior of "fake self-management, real agent" is that the enterprises actually exporting goods avoid and transfer the risk of export tax refund by letting other enterprises export, and evade the supervision of the tax authorities.

As mentioned above, in tax fraud cases of agricultural products, textiles and other goods, enterprises need to issue false invoices from shell enterprises, which usually do not have production capacity, and are bound to be exposed once verified by tax authorities. However, if the wrongdoers utilize export enterprises with good credit and a certain scale to refund taxes, the tax authorities will not necessarily carry out verification or correspondence. Even if they are checked, these enterprises themselves have a large number of normal business, it is generally difficult to find out the problem, thus forming a "firewall" function.

The same applies to the "four-self, three-no-miss" model. The "four since the three do not see" refers to not see the export commodities, do not see the supply owner, do not see the foreign businessmen, allow or allow others to bring their own customers, bring their own source of goods, bring their own bill of exchange, their own customs declaration, this behavior is usually the use of export enterprises to obtain export tax rebates, tax refunds, tax refunds after the export enterprises and the actual exporter to share the tax rebates. If a case is found, the export enterprise will be involved in administrative and even criminal risks.

Therefore, export enterprises should first strengthen their own tax compliance to eliminate the above two types of violations, and not carry out non-compliant export behaviors for the sake of a little benefit, or because of referrals or requests from friends or acquaintances. If it is proved that the exporting enterprise knows or has intentional liaison, it is easy to constitute an accomplice to tax fraud, and the risk is extremely high.

(III) Strengthening the verification of supplying enterprises to prevent the outbreak of risk
In the case of fraudulent export tax rebates, since the invoice is falsely issued and the contract is forged, generally speaking, the supplying enterprise does not have the production capacity. In the case of low value overstatement, or the case of counterfeiting precious metals, the goods do not have the contractual performance. Exporters should focus on verification when acting as an agent for export.

1. Field verification of the production capacity and production of the supplier enterprise. Enterprises with the qualification of foreign trade operators can act as agents for production enterprises to export goods and declare export tax rebates in accordance with the law, but for the authenticity of the export business, the export enterprise also has the obligation to audit. If the export enterprise can conduct preliminary due diligence on the invoicing enterprise, it is very easy to find out that it does not have production sites, production staff, lack of appropriate equipment, so as to find out that it is actually a shell enterprise.

2. Verify, test and control the function and quality of exported goods. When exporting goods, export enterprises often ignore the actual function and value of the goods because they are not the producers of the exported goods. To the tax cheats left the use of worthless goods false export declaration, low value goods high export declaration of the opportunity to exploit. In this case, it is necessary for foreign trade enterprises to assess the actual value of the goods, such as requiring the supplier enterprises to provide reliable test reports, or their own sampling, analogous to the situation of similar goods in the market, to ensure the authenticity of exported goods.

3, the export region, market demand, the number of export goods to raise vigilance. As the authenticity of foreign enterprises is extremely difficult to examine, some tax authorities can not do, so the export enterprises are more unlikely to determine the authenticity of the business through the inspection of foreign enterprises. However, it is possible to make auxiliary judgment through the export area and market demand situation of the products. For example, a large number of short-term export of goods to Southeast Asia, Hong Kong and other enterprises, the risk is higher, this is due to these places bordering the country, easy to set up associated enterprises, and even through the "border market" or smuggling of goods back to the territory of the recycling export to create a scam.

(IV) Once the risk of tax fraud breaks out, the export enterprises actively defend themselves at both subjective and objective levels.

If the risk of tax fraud has broken out, the export enterprise should actively communicate with the tax authorities, public security organs, through the subjective and objective aspects of the elements, an effective defense.

1. Subjective no tax fraud intention

Some export enterprises are indeed blinded by others to utilize and become a tool for tax fraud. The export enterprise has no conspiracy with others to cheat tax, and no cognition of tax cheating, so it does not have the willfulness of tax cheating. According to judicial cases, those who do not have the intention and do not have knowledge of tax fraud do not constitute the crime of tax fraud. However, it should also be noted that the subjective state is generally difficult to prove, and needs to start from the objective facts and evidence. For example, from the point of view of the business approval norms of the export enterprise, it does not have the intention of tax fraud, but carries out the business normally; from the point of view of profit distribution, it just obtains the normal profit of export, etc.

2. Objective no tax fraud behavior

In administrative cases of tax fraud, if the exporting enterprise suffers from implication due to problems with the inputs of the supplying enterprise, the exporting enterprise should actively communicate and draw a line with the false opening behavior of the upstream enterprise from the perspectives of real export of goods, complete availability of relevant documents, and reasonable financial transactions, etc., and strive to illustrate the authenticity of the business. If possible, strive for the application of Circular No. 39 of 2014; secondly, also strive for the enterprise to be a bona fide acquisition of the falsely issued VAT input invoices.

In criminal cases of tax fraud, if the exporting enterprise is involved in a tax fraud case due to being utilized, usually the enterprise actually exporting the goods and its related parties have been proved to have committed tax fraud, however, this does not mean that the foreign trade enterprise has also committed tax fraud. If the export enterprise can confirm that the goods are really exported, the filing documents are complete, and the financial transactions are normal and reasonable, then the export enterprise itself does not have false declaration of tax fraud, subjectively there is no intent to cheat the tax, but just be used as a tool to cheat the tax, and although it is involved in the case, it does not mean that it constitutes tax fraud.