On December 30, 2021, the Ministry of Finance and the State Administration of Taxation (SAT) issued the Announcement on Improving VAT Policies on Comprehensive Utilization of Resources (No. 40 of 2021), which stipulates that renewable resources recycling enterprises can choose to apply the simplified tax method to calculate and pay VAT according to the 3% levy rate. The new policy has been implemented since March 1, 2022, and for more than a month, the implementation of the landing around the world is not the same, with the waste enterprises reflecting the majority of the problems, according to the in-depth understanding and observation of Huayi, the new policy has not yet completely brought the waste materials industry out of the dilemma.

With the Notice on Administration of Collection of Individual Income Tax on Income from Equity Investments and Operations (Notice No. 41 of 2021 of the Ministry of Finance and the State Administration of Taxation) coming into effect, the tax advantages of holding equity, shares, partnership shares and other equity assets in partnerships are no longer available, and many investors have begun to dismantle their partnership investment structures and return to the original state of direct shareholding by natural persons. However, the dismantling of the investment structure will also result in a high tax burden, and in addition, even if the partnership is canceled, all types of transactions that occurred prior to the cancellation may still be subject to retroactive adjustments. Recently, a local tax bureau made public a case of multi-layer nested partnership write-off and the partners were subjected to retroactive tax payment. This article will analyze the tax risk of dismantling the partnership investment structure in light of this case.

Shareholding is a relatively common mode of shareholding in the capital market at present, and the mode of shareholding has been recognized by law according to the relevant provisions of the Civil Code and the Company Law. However, there is no systematic provision in the tax law on the taxation of shareholding, especially on the issue of whether the shareholding is subject to personal income tax, which is still controversial in practice. This article will combine the current legal provisions and IPO cases to put forward three suggestions for readers' reference on the tax-related risks faced by the restoration of nominee shareholding.

Recently, seventeen energy companies in Shanxi Province have been investigated for allegedly falsely issuing VAT invoices, with a cumulative total of about 1.8 billion yuan of falsely issued VAT sales invoices to the outside world, and were confirmed to be on the run (out of contact) after inspection by the tax authorities. The tax authorities have issued a Decision on Tax Treatment and transferred them to the judicial authorities in accordance with the law. This matter may trigger a large-scale investigation of hundreds of invoiced enterprises, and the potential administrative risk and criminal risk will be transformed into reality. Then, after the competent tax authorities of the invoiced enterprises receive the Letter of Concurrence on Tax Violation Cases to start the inspection procedure or the public security authorities receive the criminal case, how should the invoiced enterprises respond?

Since 2017, with the concentrated efforts of tax authorities in the special rectification of the scrap material industry, the number of fictitious invoicing cases in the scrap material industry has surged. Companies and individuals involved in these cases are facing significant administrative and criminal risks. Based on recent cases handled by Hua Tax Agency in the scrap material industry, these cases have gradually extended to both ends of the supply chain, involving a wide range of entities. Individuals in different transaction segments, including individual sellers, recycling enterprises, and end-users, are often implicated. The tax-related criminal risks now cover various aspects of scrap material procurement and sales transactions. The concentrated outbreak of fictitious invoicing cases imposes stringent requirements on legal defense.This article, drawing on an understanding of the scrap material industry and knowledge of tax and criminal laws, along with insights gained from numerous fictitious invoicing cases handled by Hua Tax Agency, analyzes business models, elements constituting fictitious crimes, case facts, and evidence. Based on this analysis, the article puts forward six key points for a defense of innocence from the perspectives of conviction and sentencing. These points are intended for reference by tax professionals and business personnel.

In recent years, with the launch of the "Crackdown on Fraud and Forgery" special campaign by four ministries, criminal cases related to false invoicing in the scrap material industry have continued to surge. The number of cases is on the rise, and heavy sentences are frequently applied. According to the search results, in 2020, a total of 90 cases of enterprises engaging in harmful tax-related crimes were publicly disclosed on the China Judgment Online platform. Among them, cases involving the crime of falsely issuing value-added tax special invoices accounted for the overwhelming majority, reaching 87 cases. In these 90 cases, there were 66 cases in the first-instance procedure. Among them, 23 cases resulted in sentences of more than ten years of imprisonment, and one case even received a life sentence, with a heavy sentence application rate exceeding 36%. Cases where probation was applied amounted to 19, with a probation application rate of less than 29%. Constrained by the specific nature of the scrap material industry, the inability of individual suppliers at the source to issue value-added tax special invoices has become a significant factor hindering the development of the industry. This issue has led to a considerable number of related practices, such as affiliation and proxy invoicing. In practice, many defendants who are still deemed to have committed the crime of false invoicing and are subject to heavy sentences after the first and second-instance procedures raise objections to the judgment. Initiating an appeal becomes an important way for these defendants to safeguard their legal rights. In this article, lawyers from Hua Tax Law Firm, drawing on their practical experience in representing cases related to false invoicing in the scrap material industry, analyze key issues and practical points to consider during the appeal process, providing reference for relevant enterprises and individuals.

From the perspective of policy context, there has not been significant change in the operating model of the scrap material industry, and the consistent practice of granting value-added tax (VAT) preferences reflects the country's policy orientation towards resource recycling. However, since the cancellation of the policy of VAT prepayment and refund for the scrap material industry in 2000, and the further cancellation of the VAT exemption for the sale of scrap materials by recycling units in 2008, scrap material recycling enterprises have faced the dilemma of lacking input invoices and bearing a heavy burden of VAT, with difficulty obtaining pre-tax deduction vouchers for corporate income tax.Since 2017, there have been successive outbreaks of fraudulent cases involving scrap material recycling enterprises in various regions of the country. The cases involve numerous upstream and downstream companies, and the amounts involved are enormous. Once the crime of issuing fraudulent VAT special invoices is established, the companies and individuals involved will face serious criminal liability. As a result, in order to avoid the potential risk of issuing fraudulent invoices, many scrap material recycling enterprises have chosen to forgo obtaining input invoices and fully pay the VAT on the sales link, opting instead to use self-made vouchers for cost deduction.Recently, tax authorities in some regions have begun to investigate the tax situation of scrap material recycling enterprises, with particular attention to the issue of pre-tax deduction vouchers for corporate income tax. In this issue, the author combines multiple relevant consultations to analyze the issue of pre-tax deduction vouchers for scrap material recycling enterprises, with the aim of providing recommendations for the scrap material recycling business.

Electric power companies may face the dilemma that suppliers are not qualified to issue VAT special invoices in the procurement process, and cannot deduct VAT inputs and EIT costs; in the production and marketing process, "surplus tickets" and sales on behalf of the power company are prone to involve the risk of false invoicing. From the perspective of enterprises, how to identify these risks and take corresponding countermeasures to curb the problem of false invoicing by combining with the requirements of tax compliance has become the focus of enterprises' attention. This paper makes a systematic description of the risks of false invoicing in the electric power industry and puts forward corresponding preventive suggestions.