Editor's note: the national unified market is an important pillar indispensable to the construction of the new development pattern of the double cycle, 2022 ‘the CPC Central Committee State Council on accelerating the construction of the national unified market of the opinion’ put forward to ‘accelerate the clean-up and abolition of various regulations and practices that impede the unified market and fair competition’, ‘improve the fair competition review system’. improve the fair competition review system". With the implementation of the ‘Fair Competition Review Regulations’ and its implementation rules, the financial incentives and subsidies given by local governments in the process of attracting investments in the past have faced questions about their legitimacy and have been gradually cleaned up. Some special industries rely heavily on such local policies, and once they lose the incentives and subsidies, they cannot operate. For example, some with social welfare nature of the business, such as the recycling of low-value resources, this is not profitable, without government subsidies, private enterprises will not participate. Another example is the network freight transport discussed in this paper, which has to rely on incentives and subsidies to survive because of the inherently heavy tax burden. With the abolition of local policies, the national unified market background of the network freight industry will go?

First, a treasure mine, the capital chain breaks or due to subsidies not honoured triggered 

At the beginning of this month, freight a treasure ‘announcement’ in the network freight industry triggered heated debate. The company is currently experiencing liquidity difficulties, it is rumoured that the platform cash, invoicing function has been paralysed. In this regard, a treasure announcement that ‘changes in the business environment’ and ‘other related factors’.

‘Changes in the business environment’ triggered speculation in the industry. According to the platform promotional materials, the platform to enjoy the local financial policy incentives, ‘according to the operating contribution to enjoy the platform single 3% -4% policy subsidies’. Combined with the current construction of a unified national market, the ‘Fair Competition Review Regulations’ and its implementation details of the implementation of the background, so that people can not help but associate the platform capital chain break or due to the rewards and subsidies did not cash triggered. This conjecture also intensified the industry as a whole for relying on local financial incentives and subsidies for the future of the network freight platform concerns.

In fact, in the past two to three years, there has been a network freight platform due to subsidies not honoured caused by the break in the capital chain, which led to large-scale tax arrears, worsening the relationship between the tax enterprises, government and enterprises, was held criminally liable for fraudulent VAT invoices, and ultimately sentenced to more than 10 years of imprisonment.

Second, under the background of strict investigation of illegal tax return, there is a large tax risk in the return mode 

In the past two years, under the joint supervision of the Audit Office and the State Administration of Taxation, etc., the clean-up activities of illegal tax return have been carried out in various places, and a number of enterprises have been required to return the financial incentives and subsidies. Enterprises that have been cancelled, their shareholders have been asked to assume joint and several liability. Those who refused to return them were, according to some sources, filed with embezzlement cases. In these disclosed cases, some enterprises were able to avoid linking the incentives and subsidies directly to tax payments when they reached agreements with the local government, for example, by using the transaction amount as the basis for the subsidy, but were ultimately found to have essentially ‘linked them to tax payments’.

According to publicly available cases, some enterprises were found to have recovered subsidies based on policy documents that were found to be ‘invalid’ or ‘repealed’, while others recovered subsidies based on the fact that they did not comply with the requirements of the documents without evaluating the validity of the policy documents. The legal liabilities arising from different situations are also different. The legal risks of common situations are summarised in the chart below:

All in all, the rebate model in the context of the strict investigation of tax rebates for non-compliance carries greater tax risks, and network freight platforms should carefully examine the compliance and sustainability of their incentives and subsidies.

Third, the oil ticket credit is about to usher in new regulations, network freight only one way to go?

Article 2 of the Announcement of the State Administration of Taxation on Tax Exemption Filing for Cross-border Taxable Behaviour and Other Value-added Tax Issues (Announcement of the State Administration of Taxation No. 30 of 2017) stipulates, "When a taxpayer, in the capacity as a carrier, enters into a contract of transport service with a shipper, collects the freight charges and assumes the responsibility of the carrier, and then entrusts the actual carrier with the completion of the whole or a part of the transport service, the taxpayer, when purchasing on its own and The input tax credit is allowed to be deducted from the output tax credit for the refined oil products and the road, bridge and gate tolls paid that are handed over to the actual carrier for use, if the following conditions are met at the same time: (i) the refined oil products and the road, bridge and gate tolls are applied to the transport services that the taxpayer entrusts to the actual carrier to complete; and (ii) the VAT deduction vouchers obtained are in compliance with the prevailing regulations." This article is the basic policy basis for network freight platforms to offset refined oil invoices. If the model of financial incentives is not sustainable in the context of the national unified market, is the oil invoice offset the only way out?

First of all, we need to clearly recognise that the use of oil invoices for network freight platforms has always been the focus of the tax authorities' supervision. As a large number of cases of platforms purchasing surplus invoices from petrol stations have emerged in practice, the focus of tax authorities is on whether the fuel costs deducted by the platforms are actually used in the transport business. In this regard, the State Administration of Taxation (SAT) has carried out a lot of research work to determine the 100km fuel consumption range of trucks for land transport and limit the proportion of fuel invoices that can be offset by network freight transport enterprises; at the same time, it has also required network freight transport platforms to supervise the refuelling behaviours of the drivers to ensure that the refuelling is used in the platform's transport business. At the beginning of this year, the relevant departments of the State Administration of Taxation and the Ministry of Transport organised head enterprise research to listen to the opinions of enterprises as well as practical difficulties, and indicated that they were studying the detailed policy provisions of Announcement No. 30 of 2017. It is foreseeable that the regulation on the use of fuel ticket credit by network freight platforms will inevitably be strengthened.

Secondly, the fact that the state strictly prohibits illegal tax rebates does not mean that all local policies are illegal. The government of national autonomous regions has the autonomy to manage local finances, and can independently arrange the revenue and expenditure of the budget, and the Law of the People's Republic of China on Regional Ethnic Autonomy gives it the basis of superior law. Therefore, like the Inner Mongolia Autonomous Region is vigorously developing network freight transport, introduced the Inner Mongolia Autonomous Region to promote the network freight transport industry to regulate the healthy and sustainable development of the action programme.2024 In December, data from the Department of Transportation of the Inner Mongolia Autonomous Region showed that from January to November the network freight transport industry in the whole region has completed 6.97 million orders of freight, 250 million tons of freight transport, the transaction value of 15.7 billion yuan, and the road transport industry to achieve taxes 3.56 billion yuan, of which the network freight transport to achieve tax revenue of 1.106 billion yuan, to cultivate two 5A-level network freight transport enterprises, more than 37 large-scale network freight transport enterprises, the output value of more than 23 billion yuan. Of course, across the country to carry out remedial action, clean up undue interference in the market and tax revenue linked to subsidies or rebates in the process, the Inner Mongolia Autonomous Region Department of Transportation, Department of Finance has also issued a letter requesting that "the allied municipal transport authorities, the financial sector immediately on the department and the banners and counties and districts issued by the network of freight transport policies and documents, etc., combing, the existence of violations of network freight transport incentives and subsidies linked to the tax contribution. Freight reward and tax contribution linked to the policy initiatives, before the end of July will be repealed or modified and reissued. From the implementation of the situation, a number of places to modify the incentive funds to pay the way, the cancellation of the incentive and tax payments, economic contribution value linked to the district-level finance directly allocated to the freight platform practice, but by the district-level finance to set up a network freight industry incentives special funds included in the government's annual financial budget. It can be seen that, if the ‘one-size-fits-all’ cancellation of the award policy, will lead to most of the platform type of enterprise can not survive, through the legal and compliant way to give support to the platform economy, the Inner Mongolia practice for the development of the platform type of economy around the world to provide a reference to the sample.

Fourth, the network freight false opening frequently, ‘back-up single’ ‘offline single’ controversial 

No matter what mode to choose, false opening red line can not be touched. In the increasingly stringent regulatory environment, we based on the observation of practice cases, found that the death of network freight false open more from the regulatory authorities for the ‘waiting list’ ‘offline single’ cautious attitude. Admittedly, we have analysed many times in our previous articles that ‘waiting list’ and ‘offline list’ are suspected of violating the current rules of network freight transport, but whether such administrative violations need to be cracked down on as a false invoicing offence, we believe that it is not appropriate to overdo it, and the criminal law should maintain the principle of modesty and suppression. The criminal law should also maintain the principle of modesty.

On 18 March 2024, the Supreme People's Court and the Supreme People's Procuratorate's Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering the Administration of Tax Levies, Article 10, paragraph 2, stipulates, "For the purpose of falsely increasing the performance, financing, lending, etc., which is not aimed at fraudulently offsetting taxes and does not result in the fraudulently loss of taxes due to the offset, it will not be punished by this crime, and if it constitutes any other crime, it will be prosecuted for criminal responsibility by other crimes in accordance with the law. other offences to pursue criminal liability." The ‘backorder’ business of the network freight platform enterprise is based on the actual occurrence of real services, and the purchaser recorded in the invoice paid the full amount of VAT to the network freight platform, and the network freight platform also truthfully declared and paid the VAT payable in this segment in accordance with the regulations, and from the viewpoint of the principle of VAT offset, the amount of tax that the shipper offset is exactly the amount of tax that it paid to the platform. tax is exactly that part of the tax which it paid to the platform and which the platform has paid to the tax authorities. Therefore, the purchaser of the invoice in the back-up business has already obtained the legal input tax credit rights and interests, and the input tax credit for this part does not cause the loss of national tax, which also meets the offence provisions in the judicial interpretation. The same is true for the ‘offline single’, certain judicial authorities that the consignor has identified a good transport driver and then designated through the network freight platform to receive orders, the platform in essence does not play any role, not to provide network transport services, and then found that the false opening. However, the misunderstanding of such a determination is that, once the use of ‘network freight’ mode, the transport responsibility of the platform already exists, and can not be simply whether to match the driver to determine whether it is to play the function of network freight; and consignor, the driver has also reached the application of the ‘network freight’ before the transport The shipper and the driver have also reached an agreement on the application of ‘network freight’ before the transport, and the tax law should not intervene too much in the legal civil transaction arrangement.

Summary: The ‘life’ of network freight transport lies in the use of Internet technology to achieve information sharing, resource integration and business co-operation, improve transport efficiency, improve quality and efficiency for the logistics industry, and then create a new quality of productivity. Considering only false starts, fraudulent subsidies for profit enterprises, is bound to be eliminated by the times.