Under the anti-corruption work, a number of hospital directors and pharmaceutical companies have recently been investigated on suspicion of serious disciplinary violations, a large number of academic conferences have been suspended or postponed, the market value of listed pharmaceutical companies fell, ipo was suspended or rejected, and even a famous pharmaceutical company delisted from the market. In the context of anti-corruption, a large number of pharmaceutical enterprises sales costs in the "gray area" was uncovered, tax compliance is faced with the question, anti-corruption process can be expected to involve tax administrative and criminal responsibility. In this paper, we will observe the new trend of regulation of pharmaceutical enterprises under the trend of anti-corruption, analyze the tax risk points of pharmaceutical enterprises, and provide suggestions for pharmaceutical enterprises to cope with tax inspections in the following period for the benefit of readers.

I. The anti-corruption situation in the pharmaceutical industry has tightened, and a large number of cases have erupted among hospitals and pharmaceutical companies

(I) a number of hospital directors suspected of violations of discipline to take the initiative to surrender or be examined and investigated

According to the report of China News Network and our observation, there have been hundreds of hospital party secretaries and presidents of the Commission for Discipline Inspection and Supervision Supervisory Investigation, and there are also certain hospitals in charge of the anti-corruption remediation can not withstand the pressure to take the initiative to surrender, account for the violation of the law. This anti-corruption involves an extremely wide range and has a great impact. In these cases, the use of academic meetings, sponsorship fees, airfare reimbursement and other ways to receive funds to bribe is more common. However, under the climax of the anti-corruption campaign, whatever hidden means of bribery are used will be investigated and punished.

(II) a number of pharmaceutical companies shareholders, directors and supervisors were transferred to the Discipline Inspection Commission or public security and judicial organs

Under the state's crackdown on corruption in the pharmaceutical field, the risk is also transferred from doctors and directors to pharmaceutical companies. At present, there have been a number of pharmaceutical enterprises, shareholders, managers and other light by the Discipline Inspection and Supervision reminded to talk to the party disciplinary action, the heavy transferred to the public security judicial organs. Therefore, whether it is the shareholders of pharmaceutical companies, actual controllers or directors and supervisors should pay attention to this, as soon as possible to carry out self-examination and self-inspection.

(III) the impact of anti-corruption extended to the pharmaceutical industry capital field

According to our observation, the current medical associations across the country scheduled to be held in August academic exchanges, expert forums have been postponed. According to the announcement of the postponement, the specific time of organization is not known. It can be seen that in the past, when the conference cost expenditure occupied the higher expenditure of pharmaceutical enterprises, there were indeed some cases of false conferences. Under this trend of academic conferences, training, etc. being postponed or suspended under the anti-corruption, conference expenditures should decline year-on-year and year-on-year in the financial statements of pharmaceutical companies.

Under the anti-corruption, a number of pharmaceutical companies have been denied listing, and also delisted and delisted. Through the combing of pharmaceutical enterprises listed on the inquiry found that the commercial bribery of pharmaceutical enterprises is the absolute focus of the SEC's attention: whether the sales costs are higher than the level of peers, the reasons for the substantial increase in sales costs, academic promotional fee expenditure, exhibitions, research and consulting, promotional activities issued invoices, vouchers, whether the real, legal and compliant, whether there is the situation of the return of funds, etc., once there is a contradiction in the financial data, incomplete chain, etc., it will be rejected; after listing due to the high requirements of information disclosure, etc., the financial statements will be published regularly, and the situation of the percentage of sales expenses is even more concerned by investors and other members of the public. Therefore, commercial bribery in the field of medicine should be absolutely prohibited behavior of pharmaceutical enterprises.

II. Pain point of pharmaceutical enterprises: large-scale anti-corruption or trigger false opening, tax evasion and other tax-related risks

By observing the current regulatory trends in the medical field, it can be seen that commercial bribery is not only related to the person in charge of the hospital also determines the life and death of pharmaceutical enterprises and their shareholders, directors, executives and other personnel. Next, I will analyze in depth how pharmaceutical companies use illegal tax practices for commercial bribery, affecting multiple interest groups.

(I) Risk outbreak: anti-corruption work in the context of external case sources to increase tax-related administrative and criminal risks

1. the Discipline Inspection and Supervision Commission to the tax bureau to transfer the case source: external transfer case tax inspection tends to be strict

The tax inspection program is generally divided into four stages: case selection, inspection, trial and execution. In the "Tax Inspection Case Source Management Measures (for trial implementation)" (tax general hair [2016] No. 71) of the document provides in detail the tax inspection case source, of which, the third paragraph of Article 11 lists the clues provided by the superior disciplinary inspection and supervision unit through the supervisory letter and other forms of supervision and inspection tasks issued in the form of the clues provided, and the sixth paragraph of the regulation lists the source clues provided by the disciplinary inspection and supervision and other external units. As the discipline inspection and supervision unit itself has the right to supervise the tax authorities, tax law enforcement officers in order to avoid their own law enforcement risks, the inspection bureau of the relevant pharmaceutical enterprises compared to the "double random" inspection method of inspection initiated in the exercise of discretion in the exercise of the time is inclined to be strict.

2. the Commission for Discipline Inspection and Supervision directly to the public security referral: the probability of the outbreak of criminal risk increased

Discipline Inspection Commission and Supervisory Commission in the suspected violation of discipline hospital director in the process, is very likely to be implicated in the bribery party, the Discipline Inspection Commission and Supervisory Commission of some major tax-related cases may not be handed over to the tax authorities, will choose to transfer the case directly to the public security. For pharmaceutical companies, the lack of tax audit response procedures leads to increased criminal risk. For example, for some cases where the application of the tax law is controversial, referral may be avoided by explaining the industry to tax enforcement officials. For example, in the case of tax evasion through fraudulent issuance of general invoices, the circumstances are minor and may be characterized as tax evasion rather than fraudulent issuance. However, public security is more strict in dealing with pharmaceutical cases referred by the Discipline Inspection Commission, and there is a greater likelihood of being held criminally liable for false invoicing.

3. the investigated doctors, medical representatives, agents and other whistleblowers, merit implicated in tax law violations

By searching the published pharmaceutical enterprises usually can be seen, a pharmaceutical company through fictitious transactions, forged contracts and other means of fraudulent invoicing of funds to a doctor after a bribe, the doctor was dealt with separately, or in a doctor's bribery can also be seen in the pharmaceutical company a bribe to the doctor, the so-and-so was dealt with separately. False invoicing cases and bribery cases are often linked to each other, therefore, in general, the investigated doctors, pharmaceutical representatives and other personnel in order to fight for the judicial authorities to mitigate, lenient punishment and other leniency, often reported to the pharmaceutical companies, which will also be implicated in the case of tax violations of the pharmaceutical companies.

(II) Under the anti-corruption, the common risk business and mode of pharmaceutical enterprises

1. Sales costs are abnormally high, academic conferences, promotion services lack of evidence material

Due to the current centralized procurement coverage is not comprehensive, pharmaceutical "with gold sales" model still exists on a large scale, resulting in pharmaceutical companies to fictional "conference fees" "promotion service fees" and so on. The name to extract funds for gray expenditures, this means in the pharmaceutical industry has long been no secret. Therefore, whether it is a tax inspection or in the ipo inquiry, sales expense accounting account is the focus of the inspection and inquiry, and inquiry feedback, sales expense detailed account conference fees, promotion services accounted for a high proportion of the listing was rejected for important reasons.

However, pharmaceutical companies to convene academic conferences, promotion services, itself is a normal business behavior. In other words, a pharmaceutical company's conference and other service expenses, unless the shell company, generally can not be all false. At least, it should be "both true and false". However, in the case of anti-corruption work and tax audits tend to tighten, some law enforcement officers may be formed within the "academic conferences, promotion services are false" this understanding, which leads to the pharmaceutical company's real expenses are also denied.

At the same time, due to conference services, promotional services, this "service" is not like goods can be confirmed in kind. I often see in the work of some pharmaceutical companies with only a contract, an invoice into the accounts, there is no other supporting materials, in this case, even if the service is real, but also can not provide sufficient evidence to persuade the tax, discipline inspection or public security officers, leading to be recognized as false or tax evasion.

2. Bribery through fictitious business and false invoicing to extract funds

After the reform of the "two-invoice system", although the multi-level invoicing no longer exists, but high open, false invoicing behavior is prohibited, the sale of pharmaceutical companies often take the false invoicing way to obtain funds for bribery, common false invoicing means of obtaining funds are:

The procurement of raw materials and drugs, especially some pharmaceutical enterprises have proprietary Chinese medicines, sugar coating and other products, the need to purchase Chinese herbs, sugar cane, sugar beet, etc., the use of agricultural products invoices from the characteristics of the self-benefit of the false production of agricultural products purchase invoices to increase the cost of enterprises so as to extract funds for bribery;

Combined with cso, csp and other third-party new business organizations in the name of consulting fees, conference fees, etc. false invoicing to extract funds, increase sales costs to reduce profits at the same time offsetting input tax, reduce tax burden;

The use of regulatory arbitrage false invoicing, some local governments in order to attract investment, some pharmaceutical parks given tax rebates and discounts and other tax incentives, pharmaceutical companies through the park enterprises to buy drugs, raw materials at a lower cost, it will be the park enterprises to join the purchase and sale of the link in the park enterprises to buy raw materials manufacturers. The model, although the overall legal, but in this there are through false invoicing and the return of funds in the form of illegal behavior to obtain funds;

Specialized use of shell companies false invoicing, some lawbreakers use relatives and other acquaintances of identity documents to register a large number of shell companies, in order to obtain the handling fee and other undue benefits, fictitious business transactions, specializing in false invoicing for pharmaceutical enterprises to obtain funds, false invoicing of special value-added tax invoices in the crime of one of the manifestations of the form is to let people for their own false invoicing, pharmaceutical enterprises as the recipient of the invoice, but also suspected of false invoicing crime.

(III) false invoicing commercial bribery behavior on the adverse effects of pharmaceutical enterprises

1. reputation destruction: tax credit is reduced, the loss of credit announced joint disciplinary action

Good reputation is the intangible assets of pharmaceutical enterprises, which can help them win social trust and improve credibility. Once a pharmaceutical enterprise is investigated by the tax department for tax violations and is subject to administrative penalties or constitutes a crime, the biggest impact on the enterprise is the loss of its own reputation, which triggers an avalanche effect that will be difficult for pharmaceutical enterprises to bear. The tax department evaluates the enterprise's tax credit every year, and if the enterprise has tax violations, it will be directly judged as level D in the current year. At the same time, the tax authorities have also established a memorandum of cooperation with other departments, and the tax level of the enterprise will be announced, and the tax violations and dishonest behaviors of the pharmaceutical enterprises will be made public, and it will be prohibited to participate in the government procurement activities of the pharmaceutical enterprises as well as some of their high-consumption behaviors, etc., which will result in the loss of business opportunities for the pharmaceutical enterprises. Pharmaceutical enterprises will lose business opportunities.

2. tax treatment: tax recovery and collection of late fees, tax evasion of five times the amount of administrative penalties

Article 63 of the Tax Administration Law clearly lists four ways of tax evasion by enterprises, and the tax evaded not only has to be recovered, but also has to be levied late payment fees and fined more than 50% and less than 5 times of the unpaid or underpaid tax. Therefore, if the pharmaceutical enterprises off the books, hidden income, false tax returns and other behavior once the tax authorities audit characterized as tax evasion, may face serious administrative penalties.

3. Constituting a criminal offense: false VAT invoices or tax evasion and bribery are punishable together, and the maximum penalty can be life imprisonment.

On the one hand, the pharmaceutical enterprises to evade taxes to extract funds, to reach a certain amount of proportion constitutes the crime of tax evasion; on the other hand, the pharmaceutical enterprises by letting others for their own way of false VAT invoices or their own way of false invoices for the purchase of agricultural products to offset taxes to extract funds, may constitute the crime of false VAT invoices. At the same time, pharmaceutical enterprises will be tax evasion, false invoicing way to extract funds used to pay bribes to doctors may constitute the crime of bribery, the current criminal law amendment (XII) draft has been submitted to the whole people for consideration, the draft emphasized in the field of health care bribery from the heavier penalties, to increase the bribery crime of punishment. Tax evasion, fraudulent invoicing and bribery a violation of the national tax collection and management system of law and order, a violation of the integrity of the office behavior, the two behaviors are very likely to be the judiciary to several crimes and penalties for conviction and sentencing, the maximum sentence of up to life imprisonment.

III. Compliance and Response: Pharmaceutical Enterprises Urgently Need Risk Control and Response

To summarize, pharmaceutical enterprises, whether under the climax of this anti-corruption campaign or in their future business development, should expeditiously carry out tax risk control and strengthen their ability to cope with tax risks. In this regard, it is recommended that pharmaceutical enterprises carry out timely tax health checks, self-examination of costs and expenses involved in sales expenses, whether there are invoices in violation of the law, whether there are private "small treasury" and other violations of the relevant tax-related risks, and improve the degree of compliance with their own taxes.

(I) Timely tax self-inspection and risk control

Although according to the provisions of the current Tax Collection and Management Law and other laws, there is no exemption or preferential treatment for taxpayers' self-investigation of tax reimbursement, according to the author's understanding, the State Administration of Taxation had internally issued the "Circular of the State Administration of Taxation on the Further Improvement of Work Related to the Investigation and Disposal of Cases of Tax Violations" (Taxation Administration [2017] No. 30) in 2017, which stipulates: "For those who take the initiative and truthfully make up tax payments, pay late fees, or cooperate with the tax authorities in investigating and dealing with tax violations with meritorious performance, the tax administrative penalties shall be lightened or mitigated in accordance with the law. For tax offenses that are minor, and active and timely payment of taxes and late fees, without causing harmful consequences, no tax administrative penalty shall be imposed in accordance with the law." Then, if the taxpayers can self-examine and make up the tax before the audit case is filed, on the one hand, it can express the good subjective attitude of the enterprise and strive for the leniency of the tax authorities; on the other hand, it can also reduce the payment of the late payment fee.

(II) For the part of real business, organize and obtain the corresponding supporting information

For the real occurrence of pharmaceutical enterprises, but in the accounts because of internal management irregularities and other reasons there is no other supporting information to support the meeting costs, promotion costs, advertising costs, etc., should be actively contacted with the organizers, participants, to obtain or make up for the corresponding evidence materials.

At the same time, pharmaceutical companies should also establish and improve internal management and compliance systems. Under the anti-corruption work in full swing, if a part of the commercial bribery can be dissipated to the cost pressure on pharmaceutical enterprises, it is a good opportunity for pharmaceutical enterprises to establish and improve the tax compliance mechanism, to eliminate the behavior of the funds through the fictitious business, and to achieve healthy development.

(III) Actively introduce external lawyers and tax practitioners to help pharmaceutical enterprises to resolve risks

In the anti-corruption process, pharmaceutical enterprises due to tax-related issues by the tax audit or into the criminal investigation stage, pharmaceutical enterprises should promptly hire tax professionals in the tax audit stage and the tax authorities on tax-related issues benign communication, the tax authorities to be made in the tax penalties in the prescribed time to apply for a hearing, to take the administrative reconsideration, litigation and other ways to resolve the conflict between the tax enterprises, to avoid the tax criminal risk. To take a step back, if you have entered the criminal stage, you should look for the help of tax lawyers as soon as possible, submit a defense opinion to be exempted from detention, and strive for acquittal.