Editor's Note: Since the implementation of the judicial interpretation on tax-related crimes by the Supreme People's Court and the Supreme People's Procuratorate (hereinafter referred to as the "Two Supreme Judicial Interpretation"), the judicial adjudication pattern of tax-related criminal cases has undergone adjustments due to the narrowing of the scope of the crime of falsely issuing special VAT invoices by this interpretation, and the trend of charge diversion has become increasingly significant. Based on the public judgment document data from the implementation of the interpretation to the end of 2025, combined with typical cases of the Supreme People's Court, judge training materials, Criminal Trial Reference and defense practice experience, this article sorts out and analyzes the latest adjudication trends of the crime of tax evasion in current judicial practice, and summarizes the key points of targeted defense strategies, aiming to provide practical reference.

01 Observation on Trend Data of Tax Evasion Cases After the Implementation of the Two Supreme Judicial Interpretation

From March 20, 2024, the date of implementation of the Two Supreme Judicial Interpretation, to December 31, 2025, data from China Judgments Online shows that there were a total of 1,022 effective judgments on the five major invoice-related crimes made by courts nationwide. Looking at the overall picture of cases involving the act of falsely issuing special VAT invoices, there were 710 effective judgments actually involving such acts. Among these 710 cases, 658 were ultimately convicted and punished as the crime of falsely issuing special VAT invoices, accounting for as high as 92.6%; another 52 cases were diverted to the other four charges, accounting for 7.3%. This data directly reflects the substantial impact of the Two Supreme Judicial Interpretation on judicial adjudication. On one hand, the criminal crackdown on key charges of tax collection and management endangering crimes remains in a high-pressure state; on the other hand, due to the narrowing of the scope of the crime of false issuance by the Two Supreme Judicial Interpretation, judicial signs of charge diversion have emerged, but they have not yet formed a dominant trend at the level of effective judgments due to factors such as case handling cycles.

Focusing on the diverted tax evasion cases, among the 17 effective judgments on tax evasion during the statistical period, they can be divided into two types according to the nature of the act: First, traditional tax evasion cases, totaling 13, including 11 cases of concealing income to evade taxes through off-book operations, setting up "two sets of accounts" and other methods, and 2 cases of making false tax declarations by using falsely issued ordinary invoices as cost and expense vouchers; Second, new-type diverted cases, that is, cases where the actor committed the act of falsely issuing special VAT invoices but was ultimately convicted and punished as the crime of tax evasion by the court, totaling 4 cases with case numbers: (2024) Gan 0271 Xingchu No. 116, (2024) Yue 13 Xingzhong No. 145, (2025) Qing 0105 Xingchu No. 212, and (2025) Xin 2323 Xingchu No. 70. These 4 cases account for 23.5% of the total number of tax evasion cases during the statistical period. It is worth noting that in the investigation stage of these four cases, the public security organs had clearly included them in the investigation direction of the crime of tax evasion, reflecting the accurate grasp of the characterization of tax-related crimes by judicial organs in these cases.

However, judging the scale of diversion to the crime of tax evasion solely based on the volume of 17 cases obviously cannot truly reflect the dynamic trend of judicial practice. Criminal cases must go through a complete cycle of investigation, prosecution and trial from filing to the formation of effective judgments. The Two Supreme Judicial Interpretation was officially implemented only on March 20, 2024, and a large number of cases characterized as the crime of tax evasion in accordance with the spirit of the new judicial interpretation may still be in the investigation or prosecution stage and have not been converted into public effective judgment documents. Based on the comprehensive judgment of judicial case handling cycles and current filing trends, the "release period" of diverted tax evasion cases will gradually emerge within the next two years, and by then the number of effective judgments on the crime of tax evasion is likely to show exponential growth, and its proportion in the overall structure of tax-related criminal crimes will also increase accordingly.

02 Reasons for the Gradual Emergence of the Trend of Diversion to Tax Evasion Cases

Delving deeper into the data diversion phenomenon, what are the causes behind the trend of diverting tax evasion cases? The core lies in the divergent viewpoints between the Supreme People's Court (SPC) and the Supreme People's Procuratorate (SPP) on key issues, as well as the SPC's continuous efforts to consolidate, clarify, and refine its judicial stance through a series of initiatives. Although the SPC-SPP Judicial Interpretation on Handling Criminal Cases Involving the Endangerment of Tax Collection and Administration was jointly formulated by both authorities, in the official interpretation articles released after the implementation of the Interpretation, the SPC and the SPP have shown distinct differences in their positions regarding the demarcation criteria between the crime of falsely issuing special value-added tax (VAT) invoices and the crime of tax evasion. The SPC clearly stated in its interpretation article that the key to distinguishing between these two crimes lies in whether the subjective intent is to defraud state tax revenues or to evade tax obligations, and proposed that the act of fraudulently offsetting input tax within the scope of tax liability should be convicted and punished as the crime of tax evasion. In contrast, the SPP's interpretation held a different understanding of the scope of "fraudulent offset of input tax," arguing that tax evasion involving such fraudulent offset refers to the act of fraudulently offsetting input tax through means other than falsely issuing special VAT invoices. This divergence has directly influenced the judicial characterization trend of cases involving tax evasion through false invoicing.

In response to theoretical controversies and practical judicial confusion, the SPC has continuously consolidated and adhered to its judicial stance through a series of progressive and forceful measures. On November 24, 2025, the SPC released eight typical cases of crimes endangering tax collection and administration, among which the first case, "the Tax Evasion Case of Guo and Liu," implemented the above-mentioned core judicial logic, demonstrating the judicial rule that fraudulently offsetting input tax within the scope of tax liability should be convicted and punished as the crime of tax evasion. In December 2025, in response to a proposal put forward by a deputy to the National People's Congress (NPC) requesting "clarification on the nature of the act of fraudulently offsetting input tax by falsely issuing special VAT invoices," the SPC issued Reply Document No. Fa Ban Han 〔2025〕1595, reaffirming and emphasizing its core position in the form of an official document. This Reply explicitly restated that "fraudulently offsetting input tax within the scope of tax liability constitutes the crime of tax evasion," which is consistent with the viewpoint expressed in the SPC's interpretation article published in April 2024.

Subsequently, in the newly published volume "Criminal Trial Practice" of the "Unified Textbooks for National Judge Training," the SPC dedicated a special chapter to discussing crimes endangering tax collection and administration, further clarifying the relationship between the crime of falsely issuing special VAT invoices and the crime of tax evasion. The textbook pointed out: "Falsely issuing special VAT invoices for the purpose of tax evasion does not constitute the crime of falsely issuing special VAT invoices: (1) Taking the relatively typical act in the petrochemical industry of evading consumption tax payment through falsely issuing special VAT invoices as an example... In this process, the genuine producers subjectively intended to evade consumption tax payment, and objectively did not use the falsely issued special VAT invoices to fraudulently offset tax; the tax loss was also caused by the tax evasion act, not by the fraudulent offset leading to tax being defrauded. For such acts, convicting and punishing them as the crime of tax evasion is more in line with the principle of the unification of subjectivity and objectivity. (2) Where a taxpayer increases input tax deductions to pay less tax within the scope of tax liability, even if resorting to the means of false deduction through invoicing, the subjective intent remains to avoid or reduce tax payment, i.e., for the purpose of tax evasion. In accordance with the principle of the unification of subjectivity and objectivity, such acts should be convicted and punished as the crime of tax evasion." This authoritative statement in the textbook provides clear judicial guidance for judges nationwide. In March 2026, Case No. 1669 in the newly published "Criminal Trial Reference (Special Issue on Punishing Crimes Endangering Tax Collection and Administration)" (Total Issue 147), further clarified that where a defendant reduces tax payment by fraudulently offsetting input tax but does not offset beyond the scope of tax liability, the correct charge should be applied in accordance with the principle of the unification of subjectivity and objectivity to avoid objective imputation; if the act meets the characteristics of tax evasion involving fraudulent offset of input tax, it should be characterized as the crime of tax evasion; from the perspective of the principle of proportionality between crime and punishment, the application scope of the crime of falsely issuing special VAT invoices should be strictly restricted to avoid sentencing imbalance or adverse social consequences.

03 Key Points of Defense for Changing the Charge from Falsely Issuing Special VAT Invoices to Tax Evasion

Based on the above judicial adjudication trends, defense lawyers should actively adopt the defense path of the crime of tax evasion when handling cases involving the false issuance of special VAT invoices. Specifically, the defense strategy can be constructed focusing on the following three aspects:

1. Defense of Subjective Purpose

The crime of falsely issuing special VAT invoices requires the actor to subjectively have the purpose of defrauding state taxes, while the subjective purpose of the crime of tax evasion is to evade tax liability. Defense lawyers should, through sorting out the case facts, argue that the purpose of the actor's false issuance act is to pay less or not pay the tax that should be borne, rather than intending to defraud state taxes out of thin air. Specifically, it can be carried out from two levels: First, prove that the actor has real business activities, his tax liability truly exists, and the false issuance act aims to reduce the tax burden, rather than defrauding the tax refund on excess input tax out of nothing or conducting empty invoicing; Second, analyze the objective results. If the loss caused by the act is the tax that should be paid but not paid, rather than causing the loss of state VAT tax due to fraud, it is more in line with the essential characteristics of the crime of tax evasion. In addition, when the falsely increased input tax does not exceed the actor's annual tax liability scope, it can directly be inferred that he does not have the subjective purpose of defrauding state taxes in accordance with the spirit of the judicial interpretation and the latest adjudication rules.

2. Defense of the Scope of Tax Liability

The tax evasion case of Guo and Liu released by the Supreme People's Court and a series of subsequent viewpoints provide clear adjudication rules for the definition of the "scope of tax liability". If a taxpayer falsely increases input tax for deduction within his annual tax liability scope, it should be determined as the crime of tax evasion; on the contrary, if it exceeds the tax liability scope, it may constitute the crime of falsely issuing special VAT invoices. In defense practice, the definition of the scope of tax liability should be calculated as a whole based on a tax year, rather than split by month or quarter. This calculation method can more accurately reflect the actor's subjective intent and the degree of objective harm, avoid splitting the evaluation of the overall act due to excessive deduction in a certain period, and at the same time closely echo the provisions of Article 4 of the Two Supreme Judicial Interpretation on Tax-related Crimes.

3. Defense of Circumstances Precluding Criminal Liability

Paragraph 4 of Article 201 of the Criminal Law stipulates: "Where a person commits the act specified in the first paragraph, if, after a tax authority has issued a payment order in accordance with the law, he pays the tax that should be paid, pays the late payment fine, and has been subject to administrative punishment, he shall not be investigated for criminal liability; however, this shall not apply if he has been subject to criminal punishment for evading tax payment within five years or has been given administrative punishment by a tax authority twice or more." Regarding the application of this clause, the Supreme People's Court clearly stated in Criminal Trial Reference that criminal cases convicted as the crime of tax evasion must be handled first by the tax authority. As for how to handle cases that have entered the trial stage without being handled first by the tax authority, the reference case holds that the non-investigation of criminal liability is theoretically not limited to before the case is filed. This "preferential" provision is a right-based norm granted to tax evaders by legislation. As long as it does not fall under the circumstances of having been subject to criminal punishment within five years or having been given administrative punishment by a tax authority twice or more, it should be applied equally. Regarding the specific handling method, the adjudication stance of the reference case is that if the procuratorial organ applies to withdraw the prosecution, the people's court may approve it in accordance with the law; if the procuratorial organ insists on not withdrawing the prosecution, the people's court cannot make an acquittal judgment, but should terminate the trial in accordance with the provisions of Article 16 of the Criminal Procedure Law. For such retrial cases that have already been subject to criminal liability, since terminating the trial has no practical significance, the court should declare the defendant not liable for criminal liability with reference to the provisions of Item 6 of Article 295 of the Interpretation of the Supreme People's Court on the Application of the Criminal Procedure Law of the People's Republic of China.

04 Conclusion

Charge diversion does not mean a relaxation of crackdown. The increase in the number of tax evasion cases means that tax-related criminal justice is moving from the previous generalization of serious crimes to a new stage of accurate characterization and proportionality between crime, responsibility and punishment. Accurately grasping the judicial adjudication trends of the crime of tax evasion is not only a practical need for enterprises to prevent criminal risks, but also an important basis for safeguarding their rights in accordance with the law and striving for the best results after being involved in cases.

At a time when charge diversion is accelerating, enterprises' risk prevention systems should not stop at passive response, but should integrate compliance control throughout the entire chain of pre-prevention, in-process disposal and post-remedy. In the pre-stage, enterprises in high-risk industries should focus on strengthening the management of the source of input invoices, strictly review the legitimacy of the invoicing entity, the authenticity of the goods name and the compliance of fund flow, and completely retain the whole-chain business evidence such as contracts, logistics and payment vouchers. When facing tax inspection, they should grasp the key window period to resolve risks at the administrative level and actively cooperate with the investigation. Once the case enters the criminal procedure, they should use professional forces to formulate targeted defense plans. For effective judgments with problems in charge characterization or sentencing, they should actively seek retrial according to the specific circumstances through appeal or retrial procedures to effectively safeguard their legitimate rights and interests in accordance with the law.