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Frequent gold ticket to ticket cases around the world, a large number of non-ferrous metal enterprises, renewable resources enterprises are implicated

Recently, Hwuason Law Firm has received a number of non-ferrous metal and scrap steel enterprises' consultation on the case of variable invoice and false invoicing. Combined with the frequent cases of non-ferrous metal industry's gold invoices and variable invoices in recent years, the issue of variable invoices and false invoicing in non-ferrous metal and renewable resources industry has become the focus of attention of the tax authorities. Due to the expensive value of gold itself, strong value preservation, by consumers collection and investment favorite, consumers do not ask for invoices of behavior led to the gold invoice "surplus votes" exist; at the same time due to the special tax policy of gold and gold ticket huge profits trend, emerged a number of gold ticket false opening gang; and due to the gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics, gold is easy to other non-ferrous metals melting characteristics. And because gold is easy to melt with other non-ferrous metals, gold invoices are mostly combined with non-ferrous metal industry, and extended to renewable resources metal recycling enterprises, which makes the tax risk of enterprises in the business chain surge.

I. The common pattern of non-ferrous metal change ticket false opening

(I) Violent Vote Changing

In the case of false invoicing of gold tickets, the main purpose of criminal gangs is to obtain gold VAT input invoices through the separation of tickets and goods, so as to achieve the purpose of false offsetting of national VAT, so the first step of false invoicing gangs is to obtain gold invoices. Shanghai Gold Exchange is the only national market in China that is legally engaged in gold trading, and only those units that have obtained the qualification of members or agents can purchase gold from Shanghai Gold Exchange, so the false invoicing gangs obtain the qualification of agents by submitting false information to apply for the relevant qualification or purchasing the enterprises with the relevant qualification. And through the exchange member enterprises to obtain gold and gold invoices. Subsequently, the fraudulent invoicing group usually sells the gold at a price lower than the market price to individual consumers or gold dealers, and falsely invoices the gold to the downstream shell company, which changes the invoice name to "electrolytic copper, electrolytic nickel and other metals" and falsely invoices it to the actual enterprise that uses the invoice.

Under this mode, the false invoicing gang did not insert the transaction of "alloy electrolytic copper" in the transaction chain, and changed the gold invoice to non-ferrous metal invoice directly through the shell company, and issued it to the actual invoicing enterprise. Usually, in order to increase the covert nature of the transaction, false invoicing gangs will prolong the transaction chain by setting up additional enterprises to increase the difficulty of the tax authorities to investigate and deal with.

(II) Gold into non-ferrous metal invoicing

Under this business model, the fraudulent invoicing gangs usually first commissioned the form of processing, forged gold and electrolytic copper and other metals mixed processing into alloy process, the gold invoice will be changed to alloy invoices to the downstream, and then the downstream enterprises again forged the alloy processed into electrolytic copper process, alloy invoices will be changed to electrolytic copper invoices issued to the actual invoicing enterprises. Unlike the violent means of changing invoices in business mode 1, it is difficult to find out the existence of illegal changing invoices in this business mode only from the chain of changing invoices.

(III) Gold-nonferrous metal-scrap copper invoice change

The fraudulent invoicing group will obtain the non-ferrous metal invoices through the above business model, issue them to the downstream enterprises for many times, and then change their names to copper scrap, etc., and sell them to the renewable resources enterprises. In this business model, in order to cover up the illegal facts, the fraudulent invoicing gangs usually add multiple inter-provincial and municipal invoicing enterprises in the chain of invoicing change, so as to reduce the risk of false invoicing being investigated and dealt with.

II. Analysis of the Causes of Gold-Nonferrous Metals Variable Voucher False Invoicing

(I) Specificity of gold policy

According to the Ministry of Finance and the State Administration of Taxation's Circular on Relevant Tax Policies on Gold Futures Trading (Cai Shui [2008] No. 005) in 2008, "Shanghai Futures Exchange members and customers selling standard gold through the Shanghai Futures Exchange (with the Special Invoice for Gold Settlement issued by the Shanghai Futures Exchange) are exempt from value-added tax (VAT); if the gold has been delivered and has already been taken out of storage, the tax authorities will issue special invoices for VAT on behalf of the customers according to the actual delivery price. If the sale of standard gold through the Shanghai Futures Exchange (with the Special Invoice for Gold Settlement issued by the Shanghai Futures Exchange) occurs physical delivery but has not been taken out of storage, the members and clients of the Shanghai Futures Exchange shall be exempted from VAT; if the physical delivery occurs and has been taken out of storage, the tax authorities shall issue VAT invoices on behalf of the clients in accordance with the actual delivery price, and implement the policy of VAT instant refund, and shall be exempted from the Urban Maintenance and Construction Tax and the surcharge on education fees." It can be seen that the gold exchange members can not only ask the tax authorities to issue VAT special invoices on behalf of the tax authorities, but also enjoy the preferential policies of VAT that is refundable without the need to bear the value-added tax on the purchase of gold. It is because of the existence of the above provisions, so that the special VAT invoice for gold, like the purchase invoice for agricultural products, can obtain VAT invoices with deduction value, and at the same time, the party who obtains the invoice does not have to bear the burden of VAT, which leads to a large number of gold invoices into the invoices of the emergence of false invoicing problems.

(II) Consumers don't need the invoices, resulting in a large number of gold surplus invoices.

One of the characteristics of gold is that it is expensive and has strong value preservation. For individuals, gold is one of the optimal consumer goods and investment products, therefore, a large number of individuals become the final consumers of gold, while individuals usually do not ask for VAT invoices to reduce the purchase price when purchasing gold, which leads to a large number of surplus gold invoices, and due to the deduction value of the VAT invoices, these surplus gold invoices become a source of false invoicing. Due to the deduction value of VAT invoices, these surplus gold invoices become the source of false invoices.

(III) Driven by huge profits

Due to the expensive value of gold, the face amount of a single gold ticket is very large, the value of two kilograms of gold can be up to one million, and the amount of tax deduction can be huge, for the invoicing party, it collects commission through the proportion of the face amount of the fraudulent invoices; the party receiving the invoices can deduct the input tax through the way of accepting the invoices in a false way, and it can also use the invoices as the vouchers of deduction before the income tax, so as to pay the enterprise income tax less. False "gold ticket" can be in a short period of time to the lawless elements to bring lucrative interests, the lawless elements do not hesitate to take risks, to try the law.

(IV) Gold is easy to combine with other non-ferrous metal properties

Another major characteristic of gold is not easy to chemical reaction with other substances, so commonly used with other metals smelted into alloys, the market popular 18k gold, 14k gold, white gold are gold alloy products, unlike other metals, gold smelting technology varies, so the use of false open enterprise forged gold and other metal melting and decomposition of the fact is not easy to be detected by the tax authorities.

III. Tax risk of non-ferrous metal and renewable resources enterprises surges under the tax strict supervision trend

(I) Commodity trade is still the key area of crackdown on false billing cases.

In 2021, the State Administration of Taxation (SAT) issued the "Tax Risk Oriented Precise Implementation of Tax Supervision", which states that "First, focus on key areas. Focusing on the concerns of public opinion and the people, we will focus on industries and fields such as the production and processing of agricultural and sideline products, the acquisition and utilization of waste materials, the purchase and sale of bulk commodities (e.g., coal, steel, electrolytic copper, and gold), for-profit educational institutions, medical cosmetology, live broadcasting platforms, intermediaries, and the transfer of the equity of high-income groups, etc. We will focus on investigating and dealing with the issue of fraudulent invoices, concealment of revenues, misstatement of costs, and the use of "tax depressions" and related transactions for malicious tax planning. "tax depressions" and related transactions for malicious tax planning, as well as the use of new business models to evade taxes and other tax-related illegal behaviors." It is clearly stipulated that gold, electrolytic copper and steel are among the key areas of tax violations to be combated.

(II) Preventing in-situ transfer behavior in some areas

In 2022, the Shandong State-owned Assets Supervision and Administration Commission (SASAC) issued the Interim Measures for the Control of High-Risk Businesses of Enterprises in Shandong Province, stating that "Third, no "idle" trade shall be carried out without the transaction of real goods, without the physical goods, without the flow of the right to goods, or the transfer of goods to warehouses in situ". False open gangs usually use the characteristics of alloy is not easy to flow to the warehouse issued by the transfer of goods transfer certificates to confirm the authenticity of the flow of goods, but the provisions of Shandong Province released for the above operation of the regulatory posture, to strengthen the supervision of the bulk commodities in situ transfer of warehouse behavior, which triggered the case of non-ferrous metals false open a large number of outbreaks.

(III) Crackdown on non-ferrous metal invoicing in many places

Combined with the cases described above and the recent inquiries received by Hwuason, tax authorities around the world have regained their attention to the cases of false invoicing of gold tickets and are successively launching investigations and handling of the cases of variation of gold tickets, and there are many enterprises involved in the cases of gold tickets, which may lead to the outbreak of a large number of non-ferrous metal enterprises and renewable resources enterprises with tax risks.

(IV) Upgrading of the tax system, the cause or the "cause of the problem"

The causes of golden ticket cases have been systematically analyzed above. Previously, the tax system was not sound, and it was difficult to investigate and deal with the cases of changing tickets and over-tickets, and with the supervision of the invoice name in Golden Tax Phase III, the number of cases of changing tickets and false invoicing was significantly reduced. At present, with the development of multi-departmental joint cases and the continuous improvement of the tax system, the mechanism of tax authorities to effectively identify cases of non-ferrous metal altered invoices is continuously improved, and the above causes may become the "bane" of the false gangs, which may lead to the rise of tax risks of downstream enterprises receiving invoices.

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