Editor's Note: Preferential tax and fee policies play an important role in encouraging enterprise innovation, promoting regional coordinated development and releasing the vitality of economic development. Whether it is tax rate preference, tax base preference or tax amount preference, there are strict application scope and conditions. At present, in practice, some enterprises cheat to enjoy tax benefits by means of fictitious business, split income, false reporting materials, etc., which leads to the risk of tax evasion and false opening. In tax collection and management, in recent years, tax authorities in many places have strictly investigated the illegal acts of defrauding and enjoying tax concessions. According to the data of State Taxation Administration of The People's Republic of China, during the "14th Five-Year Plan" period, the national tax authorities have investigated and dealt with 21,800 cases of defrauding and illegally enjoying tax concessions, and collected 26.9 billion yuan in taxes. Based on the case disclosed by State Taxation Administration of The People's Republic of China, this paper analyzes the compliance points that enterprises should pay attention to when applying preferential tax and fee policies under the current collection and management situation.

I. The General Administration informed a number of cases of cheating on tax concessions, all involving tax evasion and false characterization.

Since the beginning of this year, State Taxation Administration of The People's Republic of China has reported nearly 20 cases of cheating tax concessions, involving tax concessions related to agriculture, small-scale taxpayers' reduction or exemption of value-added tax, value-added tax deduction, value-added tax refund on demand, small-scale low-profit enterprises' tax concessions, and R&D expenses deduction, etc. The enterprises involved were either qualitatively tax evaded, or were investigated for criminal responsibility for cheating tax concessions by using false invoices. This article extracts three typical cases:

Case 1: Falsely issuing invoices for purchasing agricultural products for oneself and for selling agricultural products for others, amounting to 3.058 billion yuan, affecting 280 downstream ticket-receiving enterprises, and 8 criminals were sentenced for committing the crime of falsely issuing invoices.

In this case, the gang involved controlled five farmers' professional cooperatives, and in the name of selling self-produced agricultural products, the cooperatives falsely invoiced the downstream ticket-buying enterprises for value-added tax on agricultural products, charging a handling fee ranging from 5 ‰ to 7 ‰ to realize illegal profits; The downstream ticket-buying enterprises also provide personal identity information and bank account numbers to the gangs involved, pretending to be upstream farmers of cooperatives for the cooperatives to falsely issue invoices for agricultural products purchase. The inspection bureau made a tax treatment decision on the five cooperatives controlled by the gang, and found that they falsely invoiced the purchase of agricultural products for themselves and falsely invoiced the sales of agricultural products for others, involving 32,900 ordinary VAT invoices with an invoice amount of 3.058 billion yuan. 280 downstream bill-receiving enterprises were investigated and dealt with by the corresponding competent tax authorities according to law. At present, the court has made a first-instance judgment on the case. Eight criminals were sentenced to fixed-term imprisonment ranging from 9 months to 10 years and 3 months for falsely making a crime, with a total fine of 925,000 yuan and a total confiscation of illegal income of 3,433,200 yuan.

Case 2: registering self-employed individuals and using the small-scale taxpayer's VAT reduction and exemption policy to falsely issue VAT invoices, qualitatively evading taxes, recovering taxes, adding late fees and imposing a total fine of 7.26 million yuan, and transferring the clues of falsely issuing invoices to the public security organs.

In this case, the enterprise involved in the case controlled four individual industrial and commercial households, fictitious consulting service transactions, paid the wages of employees to the above four individual industrial and commercial households in the name of consulting fees, and then the individual industrial and commercial households used the small-scale taxpayer's VAT reduction and exemption policy to issue 238 ordinary VAT invoices that were inconsistent with the actual business, involving an amount of 21 million yuan, resulting in the enterprise underpaying corporate income tax and withholding personal income tax totaling 4.73 million yuan. The tax authorities qualitatively evaded taxes, recovered taxes, imposed late fees and imposed a total fine of 7.26 million yuan, and at the same time transferred the clues of false invoicing to the public security organs.

Case 3: falsely listing gold material expenses, enjoying R&D expenses plus deduction in violation of regulations, qualitatively evading taxes, paying taxes, delaying payment and imposing a fine of 36.1815 million yuan.

In this case, the Inspection Bureau of Shenzhen Taxation Bureau found through the analysis of tax big data that the R&D investment of an applied materials company in Shenzhen was huge, far exceeding the normal level of the same industry. By comparing the enterprise's declaration data, financial data, inventory data and so on, the inspectors found that the company had invested more than 80 million yuan in gold in the subject of "R&D expenses-direct materials" during the inspection period, but there was neither corresponding finished product output nor corresponding waste recycling records. Further verification by the tax authorities found that the purification loss of gold was low, and there was no huge loss, which was suspected of false expenditure. The Inspection Bureau finally found that the 17 R&D projects of the enterprise had falsely listed gold material expenditures and enjoyed R&D expenses plus deduction in violation of regulations, and qualitatively evaded taxes, recovered taxes, and imposed late fees and fines.

II. The digital upgrade helps tax supervision, and the illegal application of preferential tax and fee policies faces the risk of false opening and tax evasion.

The preferential tax policies such as VAT reduction and exemption for small-scale taxpayers and R&D expenses plus deduction involved in the above cases are very common in practice. Since 2024, the tax authorities have thoroughly implemented the deployment requirements of the CPC Central Committee and the State Council on "implementing structural tax reduction and fee reduction policies, focusing on supporting scientific and technological innovation and manufacturing development", optimizing services and strengthening supervision, and promoting the accurate and direct enjoyment of tax and fee policy dividends. Many tax authorities have formulated tax and fee preferential policy guidelines, relying on tax big data to achieve "finding people by policy" and promoted the enjoyment of tax and fee preferential policies. With the further deepening of the reform of tax collection and management, many tax and fee preferential policies simplify the procedures and procedures, and adopt the tax collection measures of "self-determination, self-declaration, and post-event supervision". For example, enterprises enjoy the preferential policies of R&D expenses plus deduction by adopting the processing method of "real occurrence, self-determination, declaration and enjoyment, and relevant materials are kept for future reference", which not only improves the efficiency of enterprises enjoying preferential policies, but also puts forward higher requirements for corporate tax compliance management and tests corporate tax compliance.

At the same time, under the background of digital upgrading and intelligent transformation of tax collection and management, local tax authorities also use tax big data to implement precise supervision on the application of tax preferential policies. For example, in the tax supervision of R&D expenses plus deduction, the tax authorities in a certain place adopt a combination of desk analysis and on-the-spot investigation, dig deep into the risk points of R&D expenses plus deduction in graphite industry, explore the establishment of a personalized management model of R&D expenses plus deduction in graphite industry, and gradually extend it to other industries such as construction and machinery manufacturing, so as to create a supervision mode of "one industry and one model". Specifically, the local tax authorities use the big data application platform of the Municipal Taxation Bureau and other systems to collect tax-related information of enterprises, and focus on the three tables of enterprise income tax settlement declaration form, balance sheet and invoice list: by analyzing the income tax settlement declaration form, we can understand the details of various R&D expenses of enterprises, which is convenient for horizontal comparison with enterprises of the same industry and size; By analyzing the balance sheet, we can grasp the dynamic changes of materials, products and inventory of enterprises, and find out whether there is a backlog of R&D materials or illegal handling of them, which will lead to problems such as less income and more enjoyment of R&D expenses. By analyzing the invoice list and combining the input-output ratio of the enterprise, we can deduce the production cost of the enterprise, judge whether the enterprise classifies the production cost as R&D expenses, and judge whether the enterprise has the behavior of processing R&D materials outside the account. Through the analysis of the data of "three tables", the tax authorities can effectively find out the doubts about the addition and deduction of R&D expenses in enterprises and conduct risk screening. By the end of May this year, the local tax authorities had reduced R&D expenses and deducted 740 million yuan, made up losses of 520 million yuan, and made up taxes and late fees of 14.07 million yuan for all problematic enterprises found in the modeling industry.

It is not difficult to see from the above that the application mode of "self-determination, self-declaration and post-event supervision" puts forward higher requirements for corporate tax compliance, and the improvement of tax collection and management ability also makes the illegal application of tax preferential policies face stricter and more accurate supervision. If an enterprise applies preferential tax policies in violation of regulations, it may face the risk of qualitative tax evasion and fines as mentioned in the previous case, in addition to paying back taxes and charging late fees. If taxpayers use false invoices to cheat tax concessions, it also involves the problem of false invoices, which leads to the risk of criminal responsibility. In addition, it should be noted that the Interpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases Endangering Tax Collection and Management (Fa Shi [2024] No.4) issued in March 2024 included "providing false materials to defraud tax incentives" as one of the crimes of tax evasion, which also reflected the current trend of tax collection and management to severely crack down on fraudulent tax incentives.

III. Dynamic concern: accurately understand and grasp the applicable conditions of preferential tax and fee policies

Based on the above-mentioned potential tax-related administrative and criminal risks, enterprises should accurately understand and grasp the policy conditions when applying preferential tax policies, and regularly sort out and dynamically judge whether they meet the applicable conditions according to the actual situation to ensure legality, compliance and full enjoyment of tax policy dividends:

On the one hand, we should correctly understand and apply the preferential tax and fee policies. First of all, it is necessary to clarify the scope of industries to which the policy applies. For example, the VAT plus deduction policy is only applicable to advanced manufacturing industries, while the R&D plus deduction excludes the application of tobacco manufacturing, accommodation and catering, wholesale and retail, real estate, leasing and business services, entertainment and other industries; The second is to accurately understand the applicable conditions of the policy, including tax requirements and environmental protection requirements. For example, the comprehensive utilization of resources requires enterprises to obtain invoices according to law, the tax credit rating is not C or D, the tax authorities have not been punished for violating tax laws and regulations (except for a single fine of less than 100,000 yuan) in the first six months of the tax period, or fraudulent export tax refund or false invoicing has occurred. For environmental protection, enterprises are required to apply for tax refund in the first six months of the tax period. Finally, we should pay attention to the requirements of data retention, set up ledgers and retain data according to the policy, and pay special attention to whether the identification of relevant conditions requires documents from relevant departments.

On the other hand, in the face of disputes over the application of preferential tax and fee policies, we should actively defend ourselves in combination with subjective and objective factors, tax collection period and so on. In practice, there are many enterprises that mistakenly apply preferential tax and fee policies and pay less taxes due to incorrect understanding of policies. Enterprises should combine the actual situation and the evidence on file to demonstrate from the subjective and objective levels that fighting for it does not constitute tax evasion. In addition, it is also necessary to pay attention to whether the recovery of relevant taxes has passed the recovery period. According to Article 52 of the Tax Collection and Management Law, if taxpayers do not evade taxes, the tax recovery period of up to five years will apply.

IV. Summary

Under the background of digital upgrading of tax collection and management, tax authorities rely on tax big data to strengthen risk monitoring and early warning. Taxpayers should consciously abide by the law, enjoy preferential tax policies legally and legally, pay attention to the applicable conditions of preferential tax policies, and regularly carry out self-examination of preferential tax policies in light of the actual situation of enterprises or hire professional institutions to carry out tax health examination and tax-related disputes. Dynamically adjust and enjoy preferential tax and fee policies to avoid tax-related risks caused by improper application of policies.