Editor's Note: The tax-related chain of the coal industry runs through all links such as mining, purchase and sale, and equity transfer, and there are many tax-related risks. In the mining process, the tax declaration of "small taxes" such as resource tax and water resource tax is easily ignored. In the purchase and sale transactions, the problem of false issuance and tax evasion is frequent due to the lack of source invoices. In some cases, there is also the problem of false issuance in transport invoice, and the problem of tax payment caused by the transfer of equity in coal mining enterprises is also very common. Based on the cases of tax collection and management in the coal industry disclosed by local tax authorities this year, combined with the trend of tax big data supervision upgrading under the "counting taxes", this paper analyzes the tax-related risks and tax compliance suggestions in the coal industry for readers' reference.

1. The latest case: the coal industry's false opening, tax evasion, and stock transfer risks broke out at many points.

Case 1: The fictitious coal business falsely invoiced more than 1.1 billion yuan, and the case has been transferred to the public security.

Recently, the First Inspection Bureau of Chongqing Municipal Taxation Bureau of State Taxation Administration of The People's Republic of China investigated and dealt with the case of an international trading company and a trading company in Chongqing. An international trading co., Ltd. and a trading co., Ltd. are the same controlled enterprises. Without real goods transactions, the two companies fabricated coal sales business, and falsely issued 1,036 special invoices for value-added tax through fictitious production sites, forged contracts and false transactions, with a total price tax of 1.122 billion yuan. The First Inspection Bureau of Chongqing Municipal Taxation Bureau of State Taxation Administration of The People's Republic of China, according to the relevant provisions of the Measures for the Administration of Invoices, identified the relevant invoices issued by an international trading company and a trading company as false, and the case has been transferred to the public security organ.

Case 2: The natural person failed to declare tax on the transfer of the equity of the coal company, and the overdue tax was fined more than 1.8 million yuan.

Recently, the Second Inspection Bureau of State Taxation Administration of The People's Republic of China Shuangyashan Taxation Bureau investigated and dealt with a case in which a natural person shareholder made equity transfer and paid less tax according to the report clues and tax big data. After investigation, the natural person shareholder Dong Songmou transferred the equity of a coal company he held, and did not declare the income, and paid less personal income tax, stamp duty and other taxes of 1,486,600 yuan. According to the Individual Income Tax Law, the Tax Collection and Management Law and other relevant laws and regulations, the Second Inspection Bureau of Shuangyashan Taxation Bureau of State Taxation Administration of The People's Republic of China has imposed a total fine of 1,820,200 yuan on Song. At present, the taxes, late fees and fines involved have been recovered and put into storage.

Case 3: Ignore the water resource tax, resource tax payment obligations, make up taxes, and add tens of millions of late fees.

A case recently published in China Tax News shows that Company A is mainly engaged in coal mining, washing, processing and sales. As a coal mining enterprise, it is a necessary daily operation for Company A to reduce water inflow and prevent underground water seepage through drainage. By analyzing the index of "comparison between the growth trend of operating income and the growth trend of drainage water resource tax", the tax authorities found that the average monthly growth rate of operating income of a coal mining enterprise continued to rise, but the drainage water resource tax closely related to its mining business was not declared for a long time, which was unreasonable. The tax authorities finally urged the company to pay back the water resource tax and add a late payment fee of more than 22 million yuan through reading materials and comparing the desks.

A group enterprise is mainly engaged in coal, electric power, chemical industry and other fields. Through the comparison of the Monitoring Barometer of Resource Tax and Fee for Coal Production Enterprises, the local tax authorities found that before September 2020, the amount of raw coal invoices issued by the Group and its four member enterprises completely matched the amount of raw coal declared by its resource tax. However, since September 2020, the number of raw coal and coal washing invoiced by the group and these four member enterprises is inconsistent with the number of raw ore and mineral processing declared by its resource tax. The tax department further analyzed the VAT input invoices of Group A and related member enterprises, and found that there were no invoices related to the purchase of washing equipment or the construction of factory buildings related to the expansion of washing and dressing plants, and there were no acts such as outsourcing washing and dressing equipment or expanding washing and dressing plants. Through on-the-spot verification, the tax authorities believe that the beneficiation links of the coal mines under the Group are only simple crushing and screening, which does not meet the standards of beneficiation process, and there is a risk of confusing raw ore with beneficiation and paying less resource tax. After being reminded by the tax authorities, the group finally confirmed the relevant risks and paid the taxes and late fees.

2. The innovation of supervision mode: accurately identify the tax-related risks of coal enterprises by counting taxes.

In recent years, the tax authorities have carried out the "strong foundation project" of tax collection and management under the condition of digital transformation, and promoted tax administration according to law, tax administration by numbers and strict tax administration. In the aspect of tax management by numbers, tax authorities in many places use big data analysis and other technical means to realize collaborative tax management with multiple departments, accurately identify taxpayers' tax-related risks and crack down on tax-related violations. In view of the characteristics of high risk in many links in the coal industry, in recent years, some local tax authorities have innovated a new tax supervision model to urge taxpayers to pay back taxes and fees and improve tax compliance.

In order to solve the problem of false invoicing and tax evasion in coal enterprises, a city tax bureau has established an invoice chain supervision system, formulated eight invoice risk analysis methods, strengthened the supervision of invoices in the whole process of coal industry, and based on the basic data of the invoice ledger system and combined with risk indicators, scanned the doubtful points, locked the tax-related doubtful points and screened the risks, and timely detected and blocked the tax-related risks such as false invoicing, underpayment of taxes and fraudulent enjoyment of preferential tax policies for small-scale enterprises. In addition, in view of the tax-related risks that some coal enterprises may have hidden income when selling coal in cash or through affiliated enterprises in practice, a city tax bureau established a coal invoice price monitoring system, statistically analyzed the quantity and price of coal commodities purchased by various enterprises in the city on a monthly basis, and released the fair price of coal sales on a monthly basis. The competent tax authorities analyzed and compared the invoice prices of coal enterprises within their jurisdiction according to the fair price, and timely verified whether there were tax-related risks for enterprises whose invoice prices were lower than the fair price.

In the tax supervision of equity transfer, in view of the regulatory difficulties such as whether the share transfer price is fair or not, a municipal tax bureau has established a supervision model of "data penetration+risk prevention and control+accurate service" for the equity transfer of natural persons, and accumulated 121 million yuan of tax for the equity transfer of natural persons. In the specific operation, the city's tax bureau found through routine data analysis that from 2020 to 2023, the frequency of changes in natural person stock rights of coal mining enterprises in the city increased by 167% year-on-year, but the personal income tax declared and paid by the coal mining industry increased by only 46% in the same period. In order to solve this problem, tax officials adopt "three screens and three cores" to screen doubts and deal with risks: first, screen the change information of industrial and commercial registration and verify the change data of natural person's stock rights; The second is to screen the financial statements of enterprises and verify the original data of owners' equity and paid-in capital; The third is to screen the financial vouchers of enterprises and verify the bank receipt of investment funds, stamp duty payment vouchers and paid-in capital accounting vouchers. Through the above screening, enterprises with tax-related doubts will be locked, and further verification will be carried out to urge shareholders to pay taxes according to law.

In the supervision of "small taxes" such as water resources tax, the tax administration department of large enterprises of a provincial tax bureau refines the classification of enterprises according to the standards such as whether to apply for a certificate, the type of over-exploitation area and the type of special industry, establishes a tax source monitoring account, implements dynamic management of the account according to the information of newly-added water-taking enterprises, the water resources demonstration report and project approval of construction projects, the transaction of water rights of enterprises, temporary water intake and other information, builds a tax source monitoring "data pool", and scans and confirms the water resources tax in time with water intake and displacement as the main observation points.

III. Compliance Suggestions: Pay attention to the tax-related risk-prone points in all links, and improve tax compliance.

Issue and accept invoices based on real business. Having a real coal purchase and sale transaction is the basis for enterprises to accept and issue invoices. Enterprises should straighten out the purchase and sale chain, make clear the rationality of the existence of transaction subjects in each link and the functions they play, issue and deduct invoices truthfully according to the actual situation of business development, and keep relevant information to prove the authenticity of business. In case of invoice compliance disputes, we can demonstrate the legitimacy and rationality of the business model based on the actual situation of business development and industry practices, and restore the contract flow, goods flow, invoice flow and capital flow according to business data to strive for favorable certainty. In addition, we should also pay attention to the issue of tax recovery period and control economic losses.

Pay attention to the rationality of equity transfer pricing. Whether it is a natural person shareholder or corporate shareholders, we should pay attention to the rationality of the transaction price when transferring the equity of coal enterprises. Taking natural person shareholders as an example, according to the provisions of the Individual Income Tax Law, the taxable income is the balance of the equity transfer income after deducting the original value and reasonable expenses of the equity, and the individual income tax is paid according to the "property transfer income". When transferring the equity of coal enterprises, natural person shareholders should follow the principle of fair trade to confirm the equity transfer income. For the fair price and 0 yuan transfer situation, It should be judged whether there are legitimate reasons stipulated in Article 13 of the Measures for the Administration of Individual Income Tax on Equity Transfer (Trial) (State Taxation Administration of The People's Republic of China Announcement No.67, 2014), such as the transferee is a legally binding spouse, parents, children, etc., so as to avoid being adjusted to pay taxes and collect late fees due to unreasonable taxable value.

Clarify the tax obligation of small taxes. According to the provisions of the Resource Tax Law, coal enterprises should levy resource tax ad valorem in coal mining, and coal enterprises should separately account for the mining of raw ore and beneficiation, and apply the correct tax rate to levy resource tax. In terms of water resource tax, since December 1, 2024, the pilot project of changing water resource fee into tax has been fully implemented nationwide. Units and individuals who directly use surface water or groundwater in China are taxpayers of water resource tax, and the business development of coal mining enterprises usually involves drainage, so water resource tax should be paid according to the displacement.

IV. Summary

The tax-related chain of the coal industry covers key links such as mining, purchase and sale, and property rights transfer, and the risks are characterized by the whole chain and multi-dimensions. With the in-depth promotion of "counting taxes", the tax authorities have realized accurate identification and efficient prevention and control of tax-related risks in the coal industry through innovative means such as big data modeling, multi-departmental data sharing and full-process invoice supervision. Coal enterprises should strengthen the awareness of compliance, clarify the tax obligations of all links, establish a whole-process tax compliance system, and effectively prevent tax-related risks.