Article 51 of the Tax Administration Law stipulates that taxes paid by taxpayers in excess of the taxable amount shall be refunded immediately upon discovery by the tax authorities, and the Interpretation of the Tax Administration Law summarizes the circumstances of this article as "various reasons, such as incorrect understanding of the tax law, calculation error, wrong application of the tax rate, increase of the tax amount, or improper financial and technical processing". That is to say, the Tax Administration Law and its interpretation only provides for the refund of "tax paid by the taxpayer in excess of the taxable amount", which only covers the situation of overpayment of tax caused by the lack of legal basis from the beginning, and does not provide for the refund of overpayment of tax arising from the revocation of taxable acts and other circumstances. In practice, there are many disputes on whether the paid tax should be refunded after the taxable act is revoked. In this paper, the author will cite two cases to analyze the refund of paid tax after the taxable act is revoked for readers' reference.

I. Disputes: Can taxpayers apply for refund of paid taxes if taxable acts are revoked?

(I) Case 1: The contract of using the house to offset the debt is invalid, and the paid tax does not meet the tax elements, and should be refunded.

In January 2010, Liu Mou and Chen Mou agreed to divorce, the divorce agreement stipulates that the house in question belongs to Chen Mou. In April of the same year, due to the civil loan dispute between Liu Mou and Fan Mou, the court made a civil mediation, determining that if Liu Mou failed to repay the loan to Fan Mou on schedule, Liu Mou should transfer the house to Fan Mou or Fan Mou's designated third party. In the same month, because Liu did not fulfill the repayment obligation determined by the mediation, the court made the enforcement ruling, the house will be transferred to the third person designated by Fan, namely Shen.

On September 5, 2011, Liu declared and paid 46,750 yuan of business tax and other taxes arising from the transfer of the house in question to Shen, and at the same time, Shen declared and paid 25,500 yuan of deed tax on behalf of Shen. in April 2012, the court ruled to revoke the mediation letter in question, and ruled that Liu assisted in the registration of the house transfer in Chen's name. in December 2016, Liu applied for a refund of the tax from the local tax department on behalf of Shen, asking for a refund of 25,500 RMB for the deed tax paid by Shen on September 5, 2011 The tax department refused to approve the application on the grounds that it exceeded the deadline for tax refund application, Shen filed an administrative reconsideration, and the reconsideration authority upheld the original processing.

Subsequently, Shen filed a lawsuit, requesting the tax authority to refund the deed tax he had paid. The court of first instance held that after Liu and Shen lost the legal effect of the deed of mutual covenant, Liu would not obtain the income based on the transfer of the house, and Shen could not obtain the substantive benefits of the ownership of the house, both of them no longer have the basic constituent elements of the taxpayer, and the object of taxation no longer existed. Liu mou and Shen mou had paid the tax does not meet the necessary conditions of the tax elements, does not have the basis of the tax basis, no longer meet the fundamental attributes of the tax. The court of first instance ruled that the tax authorities should re-process Liu's application for tax refund, the tax authorities appealed, the court of second instance upheld the original judgment.

(II) Case 2: Revocation or validity of the contract is not the key to determine whether the tax is refundable or not

On September 5, 2012, Company A and Company B signed the Equity Acquisition Agreement, agreeing that Company A would transfer 70% of the equity interests in Company C held by Company A to Company B, and at the same time, Company B would change all the intellectual property rights, such as the approval number of a certain drug, held by Company B to the name of Company C. On September 21, 2012, Company A and Company B completed the formalities for the change of the equity transfer and Company B paid 35.66 million yuan of equity transfer money to Company A on September 25, 2012. On September 25, 2012, Company B paid Company A 35.66 million RMB for the equity transfer. Later, Company A paid 7.15 million RMB in enterprise income tax and late payment fee for the equity transfer.

In 2014, Company A considered that Company B had violated the agreement in the Equity Purchase Agreement, and that it did not have any intellectual property rights over the so-called new drug, and that Company B's behavior was fraudulent, and Company A filed a lawsuit to the court, requesting for the revocation of the Equity Purchase Agreement. The court ruled that the Equity Acquisition Agreement signed between Company A and Company B was revoked on the ground that the equity transfer was manifestly unfair. Company A returned the equity transfer payment and interest of RMB43 million to Company B in accordance with the Agreement signed with Company B on February 27, 2014. on July 14, 2015, Company A filed an application for tax refund to the tax authority under which it operated on the ground that the Court's judgment revoked the Equity Acquisition Agreement signed between it and Company B. Company A filed an application for tax refund to the tax authority under which it operated. The competent tax authority made the Approval Reply on Not Being Able to Refund Enterprise Income Tax on September 16, 2015, Company A filed a reconsideration against it, and the reconsideration authority upheld the decision not to refund the tax, and Company A filed a lawsuit against it.

The court of first instance held that there was no provision for refunding the previously paid enterprise income tax after the revocation of the equity transfer agreement among the tax refund situations stipulated in the current laws and regulations. In this case, although the court decided to revoke the Equity Acquisition Agreement signed between Company A and Company B, the agreement and the equity transfer were invalid from the perspective of contract law. On the equity acquisition of both parties should return to each other, or to compensate for the loss of each other. However, from the administrative legal relationship, the contract is revoked or invalid is not the key to determine whether the tax refund, tax refund should be based on the law. The court of first instance finally rejected Company A's request for tax refund.

II.Practical dilemma: The existing provisions do not clarify the issue of tax refund for the tax paid after the loss of tax base

(I) Circumstances that may give rise to tax refund in practice

In the author's opinion, the situations that may generate tax refund in practice can be divided into three categories: first, policy tax refund, i.e., export tax refund, tax credit refund, tax reduction and exemption tax refund, etc. In addition, the advance levy and pre-payment system of part of the tax types may also have the situation of tax refund; second, the refund that has no legal basis, i.e., taxpayers' incorrect understanding of the tax law, miscalculation, and incorrect application of the tax rate, etc., leading to the overpayment of tax; and third, the refund request caused by loss of the tax base, such as the case mentioned above. The third is the request for tax refund caused by the loss of tax base, such as the situation that the taxable acts such as share transfer agreement and agreement for offsetting debt in kind are revoked in the aforementioned case, and the situation that the shareholder's loan has not been returned beyond the specified period and is recognized as dividend and bonus income for tax payment, and the subsequent shareholder's repayment of the loan is also faced with the problem of tax refund.

(II) The Tax Administration Law does not provide for the refund of overpaid taxes due to the loss of the tax base.

Article 51 of the Tax Administration Law stipulates that "taxpayers who have paid taxes in excess of the taxable amount shall be refunded immediately upon discovery by the tax authorities; if a taxpayer discovers this within three years from the date of settlement of the tax payment, he or she may demand from the tax authorities a refund of the overpayment of taxes plus interest on the bank deposits for the same period of time, which shall be refunded immediately after the tax authorities have verified the facts in time ". The interpretation of the Law on Tax Administration expresses the scope of tax refund in this article as "various reasons such as wrong understanding of the tax law, calculation error, wrong application of tax rate, increase of tax amount or improper financial technical processing". That is to say, the Tax Administration Law and its interpretation only provide for the refund of "taxes paid by taxpayers in excess of the taxable amount", which only covers the situation that there is no legal basis for overpayment of taxes, and does not provide for the refund of overpayment of taxes arising from the revocation of taxable acts.

In order to meet the needs of practice, some tax types have stipulated the tax refund situations other than those stipulated in Article 51 of the Tax Administration Law by way of legislation or approvals, for example, the Deed Tax Law stipulates that "if the contract of transfer of ownership, or the certificate of the nature of the contract of transfer of ownership is not in force, is invalid, is revoked, or is discharged prior to registration of the ownership of the land or the house according to the law, the taxpayer may apply to the tax authorities for refund of the paid tax". The Vehicle Purchase Tax Law stipulates that "If a taxpayer returns a vehicle on which vehicle purchase tax has been levied to a vehicle manufacturing enterprise or a sales enterprise, the taxpayer may apply to the competent tax authorities for a refund of the vehicle purchase tax"; and the Arable Land Occupation The Tax Law stipulates that "taxpayers who temporarily occupy arable land for the purpose of construction of a building project or geological exploration shall pay the arable land occupation tax in accordance with the provisions of this Law. If the taxpayer recultivates the arable land within one year from the date of expiration of the approval for temporary occupation of arable land and restores the planting conditions according to the law, the full amount of the paid arable land occupation tax shall be refunded"; in respect of personal income tax, for example, whether the individual tax can be refunded by recovering the transfer of equity shares, the Approval Reply of the State Administration of Taxation on the Individual Income Tax on Equity Shares Recovered by Taxpayers for Transfer (Guo Shui Han [2005] No.130) specifies that No.] 130) clarifies that "if the equity transfer contract has not been fulfilled, and due to the execution of the Arbitration Committee's ruling on the termination of the equity transfer contract and the supplementary agreement, stopping the execution of the original equity transfer contract, and recovering the transferred equity at the original price, the equity gain ceases to exist with the termination of the relationship of the equity transfer as the equity transfer has not yet been completed and the income has not yet been realized completely. According to the relevant provisions of the Individual Income Tax Law and the Administration Law, as well as from the principle of reasonableness of administrative acts, the taxpayer should not pay the individual income tax", but as this provision is only an approval by the State Administration of Taxation on individual cases, there are many disputes over its application in practice.

III. Our Review: The issue of claims for tax refunds should be viewed in the light of the principle of substantive taxation

Tax law is a major basic principle of tax law, only in accordance with each element of taxation, the relevant subject may become a taxpayer and be obliged to pay tax, and the state can collect tax from it. The Tax Administration Law does not specify the tax refund after the withdrawal of taxable acts, and the tax authorities shall take into account the economic substance of the acts in question and consider the tax elements to determine whether the tax refund should be made.

In the first case, the basis of tax payment by Liu and Shen originated from Liu's civil obligation to transfer the house to Shen based on Fan's act of offsetting the debt with the house as determined by the civil mediation. According to the relevant provisions of value-added tax and deed tax, the change of ownership of the house, the person who bear the ownership of the house, namely, Shen Mou as the taxable subject to pay the deed tax, Liu Mou as the transferor to pay value-added tax and additional tax. Thereafter, the court decided to revoke the civil mediation, Liu and Shen based on the house of the house against the loss of behavior, from the tax subject, Liu will not be based on the house of the transfer and gain, Shen can not get the house ownership of the substantive benefits, both have no taxpayer's basic constituent elements, the state no longer has the basis and reason for taxation; from the tax object, because of the house against the loss of relationship, the ownership of housing From the tax object, because of the loss of the relationship, housing ownership changed to the name of shen mou basic facts also no longer exist. In other words, the tax paid by Liu and Shen no longer meets the necessary conditions of the tax elements, and the tax authorities should return the tax.

In the second case, the income tax is based on the taxpayer's income. In terms of economic substance, Company A did not acquire the equity and did not profit from it, which did not meet the taxable elements of enterprise income tax, and the tax authority also constituted unjust enrichment in public law. If Company A is not refunded the enterprise income tax paid on the transfer of equity interest, it will lead to a mismatch between Company A's tax obligation and its income, which is not in line with the principle of taxing according to ability and tax equity. Therefore, under such circumstances, the taxpayer shall have the right to request for tax refund.