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2020 crackdown on drug companies and CSOs collusion cash, the determination of "false opening" should be concerned about several issues

the marketing means of "gold" sales is a common practice of many pharmaceutical companies, but with the deepening of the band purchasing, two-invoice system and other institutional reforms, the pharmaceutical industry compliance requirements are becoming higher and higher, and the management of commercial bribery is becoming more and more stringent, through the CSO cash way of commercial bribery, illegal marketing has become the focus of the finance and taxation department to regulate. The focus of supervision of the department. This article combines the background and mode of investigation and prosecution of CSO consulting service companies by tax/judicial authorities in various regions, and discusses the issues that should be concerned about the investigation and prosecution of the suspected crime of false opening.

I. Nine ministries and commissions have issued documents to combat false cash, and special tax actions have been rolled out in various regions for a long time.

The National Health Commission, the Ministry of Public Security, the State Administration of Taxation and other nine ministries and commissions jointly issued the "notice on the issuance of 2020 to correct the unethical practices in the field of medicine purchasing and marketing and medical services", explicitly "crack down on the collusion between pharmaceutical companies and CSOs, fictitious expenses to cash out to pay for illegal marketing expenses" as the main points of the work. This work deployment also highlights the prevalence of commercial bribery by pharmaceutical enterprises through CSO cash-out after the implementation of the "two-invoice system". As early as 2018, the Hubei Provincial Tax Bureau of the State Administration of Taxation (SAT) carried out special governance for the pharmaceutical consulting industry. Since then, tax authorities in Fujian, Yunnan, Sichuan, Heilongjiang, Zhejiang and other places have also carried out special remediation of suspected false invoicing in the pharmaceutical consulting industry and publicized major tax violation cases, and some regions have incorporated the governance of false invoicing in the pharmaceutical industry into the "fight against false invoicing and cheating" special action, with a focus on combating "over-invoicing" by pharmaceutical enterprises that continue to provide "over-invoicing" to pharmaceutical enterprises after the implementation of the two-invoice system. Some regions will incorporate the control of false invoicing in the pharmaceutical industry into the special action of "combating false invoicing and cheating", focusing on the CSOs who continue to provide the service of "money laundering through invoicing" for the pharmaceutical enterprises after the implementation of two-invoice system.

In the investigation and handling of CSOs, the tax authorities have determined that there is no real transaction between CSOs and pharmaceutical enterprises on the basis of the fact that CSOs have no business substance, no service provision capability, and that the consulting service fees do not match the value of the services actually provided, etc., and have transferred them to the judicial authorities for criminal prosecution on the basis of suspected false VAT invoices or the crime of false invoicing.

II. the determination of false opening should be sufficient evidence, should not be based on the price of "inflated" and other presumptions of the transaction is not real.

According to the provisions of the Criminal Procedure Law, to determine that pharmaceutical companies and CSOs have no real transactions "collusion to cash", the burden of proof in the judicial authorities, combined with the criminal tax and police joint handling mechanism, judicial practice, a way to obtain evidence for the tax authorities through the tax inspection process, that need to be held criminally liable, the case and the collection of evidence in the early stage of the data will be One way to collect evidence is for the tax authorities and the public security organs to transfer the case and the evidence collected in the previous period. One way of evidence collection is that the tax authorities and public security organs jointly investigate and collect evidence on the suspected false opening crime of the enterprise.

 The tax authorities/judicial authorities determine the authenticity of the transaction mainly through the following ways: first, proving that the CSO has no business substance and no service provision capability. This is proved by accessing the enterprise's business registration information, salary payment vouchers, and plant lease contracts. The second is to prove that the CSO and the drug enterprise transactions are not real. By retrieving the consulting service contract, the contractual service content, the way to check, for example, the price paid by the pharmaceutical enterprises to the CSO is too high, that does not match the value of the service, the service fee settlement has nothing to do with the service, but with the number of sales of medicines linked to the denial of "consulting services" authenticity; Third, to prove that the CSO is still actually for the After the implementation of the two-ticket system, the drug markup money laundering set up. Forensic methods are mainly for tracing the flow of funds, the existence of CSO and CSO real controller set up or control of a separate (or company) composed of invoicing group, according to the preferential policy quota transfer invoices issued and so on.

It is important to note that the determination of the constitution of the crime of false invoicing should be clear and sufficient evidence, the facts of the conviction and sentence should be proved by evidence, and comprehensive evidence of the whole case, the facts found have been ruled out beyond reasonable doubt. Judgment of the authenticity of the transaction between the pharmaceutical company and the CSO should also follow the aforementioned standard of proof, fully listen to the reasonable defense of the enterprise, it is not appropriate to contract the price of the service "too high", the settlement of the service fee "unreasonable", so as to presume that the transaction is not real.

III. the determination of false opening should take into account the subjective intent, drug companies recognize the value of the service should respect the autonomy of both parties

The Supreme People's Procuratorate has recently issued the Opinions of the Supreme People's Procuratorate on Giving Full Play to Procuratorial Functions to Serve and Guarantee the Six Stabilizers and Six Guarantees (hereinafter referred to as the Opinions), which makes it clear that for the enterprises with actual production and operation activities, they should not be characterized as the crime of false invoicing of value-added tax (VAT). tax fraudulent purposes and without causing tax losses, the act of false invoicing will not be characterized and dealt with as the crime of false VAT invoicing. The above opinions are basically consistent with those in the case of Zhang Mouqiang's false VAT invoices published by the Supreme Court in 2018. According to the opinions and cases of the two high courts, the following issues need to be paid attention to in order to qualify false invoicing for pharmaceutical enterprises:

If the pharmaceutical enterprise, as the invoiced party, finally realizes the growth of drug sales or the progress of market promotion through the services provided by the CSO, the price of the service and the agreement on the way of service should respect the autonomy of both parties, and if it cannot be proved that the pharmaceutical enterprise or the CSO subjectively has the purpose of fraudulently obtaining the tax, it should not be pursued for the crime of falsely invoicing VAT invoices for criminal responsibility.

IV. the responsibilities of transaction parties are different, and should be combined with the elements of the crime for independent evaluation of pharmaceutical enterprises and CSOs.

In respect of the crime of false invoicing, the invoicing party, the invoiced party and the introducer can independently constitute the main body of the crime. Therefore, if the CSO has no business substance and does not provide actual consulting service to the pharmaceutical enterprise to issue invoices, the pharmaceutical enterprise should also be investigated and obtained evidence in combination with the pharmaceutical enterprise to see whether the CSO provides services and whether it has reached a meaningful contact and conspiracy with the CSO on false invoicing to cheat the tax and if the CSO fails to prove that the pharmaceutical enterprise has the purpose of cheating taxes subjectively, it should not be prosecuted for the crime of false invoicing. If it cannot prove that the pharmaceutical enterprise subjectively has the purpose of tax fraud, it shall not be held criminally liable for false opening. In practice, the tax authorities of the pharmaceutical enterprises and CSOs to differentiate processing, CSOs as the invoicing party, no business substance, no service delivery capacity is characterized as false opening, transferred to the judicial authorities, while the pharmaceutical enterprises on the bona fide acquisition of false invoices into the transfer and simultaneous adjustment of corporate income tax. Previously, the Wuhan Municipal Taxation Bureau released the pharmaceutical consulting services company suspected of false invoicing in a number of cases, the party receiving the invoice is not a lack of well-known pharmaceutical companies, more than the former kind of divide-and-conquer approach, other areas such as Beijing, Sichuan, Zhejiang, etc. to carry out special remedial action, but also more than the use of this differentiated approach.

V. the CSO is suspected of setting up a unique false enhancement, should not directly negate the authenticity of the sales service

Some CSOs, after receiving payments from pharmaceutical companies and completing invoicing, obtain input invoices by signing contracts with individual sole proprietorships to realize the cost of CSOs and cash withdrawals. And the above individual sole is mostly registered by the actual controller of the CSO using the identity cards of friends, relatives and employees, etc., and frequently set up and canceled by taking advantage of the approved levy policy. In this case, the authenticity of the transaction between CSO and pharmaceutical enterprises should be independently determined in conjunction with the transaction information of the sales link, and if the services provided by CSO are recognized by the pharmaceutical enterprises, the enterprises should be heard to plead their case, and the authenticity of the corresponding transaction of the sales invoice should not be directly negated only by the fact that the CSO, through the individual sole, obtains the input invoices that are not in compliance with the rules or suspected of being falsely opened. In addition, the CSO company and the individual for the same actual controller, should not be launched as a matter of course, the input for the conclusion of the false opening, should still be combined with the actual collection of money corresponding to the actual service is real, the final use of the money whether the real service occurs to determine that should not be talking about the CSO color, will be invoiced to open, receive invoices are characterized by false opening.

VI. Criminal cases of false general invoicing continue to increase, and the risk of invoice compliance should be emphasized

According to the Criminal Law and its relevant judicial interpretations, if the number of falsely issued general invoices is more than 100 or the total amount is more than 400,000, a case shall be filed for prosecution. If the crime of false invoicing is serious, it shall be sentenced to less than two years, and if the circumstances are particularly serious, it shall be sentenced to more than two years and less than seven years. The circumstances are particularly serious, and there is no relevant judicial interpretation to be clarified, and in practice, it is necessary to combine the level of economic development of each region and search for the same type of cases in the same region to give the judicial authorities a certain amount of reference.

Before the implementation of the two-invoice system, pharmaceutical companies sales costs compared to other industries are also at a higher level, the tax authorities of pharmaceutical companies through false invoices false expenses, usually only require companies to make up for the corporate income tax, and did not pursue criminal liability. After the implementation of the two-invoice system, the ex-factory price of pharmaceuticals has increased significantly, gross profit margins have risen dramatically, sales expenses have risen year by year, the amount of general invoices issued by CSOs to cover sales expenses has increased dramatically, and the number of cases of transferring to the public security authorities to pursue criminal liability for fraudulent general invoices has been on an upward trend. In the aforementioned special remedial actions in various regions for the pharmaceutical consulting industry, the number of cases referred to the judicial authorities for the crime of false invoicing exceeded the number of cases of false invoicing, and enterprises should pay attention to the risk of criminal liability for false general invoicing.


The nine ministries and commissions issued the 2020 Correction "Notice" proposed to allow the conduct of medical business interactions under the premise of compliance and legality, and to establish and improve the whole process management system of prior public announcement, supervision and filing of both parties' interactions and cooperation. The above requirements, revealing how the pharmaceutical consulting services to achieve compliance, in summary, should be achieved to leave traces of the service, the chain of evidence is complete, in line with the authenticity of the expenses incurred, legitimacy, relevance. As far as pharmaceutical enterprises are concerned, the promotion of service compliance and process management is the key to determining the authenticity of the transaction, or determining the bona fide acquisition of pharmaceutical enterprises. Enterprises should focus on the compliance requirements of prior publicity, supervision and filing after the event, to achieve the whole process of activity traceability and evidence, from the signing of consulting service contracts, to the process of service provision involved in the proof and after the event supervision of pharmaceutical enterprises, the formation of compliance process management, to avoid the risk of criminal liability for false prescribing.

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