Chen Xingliang: False issuance of special VAT invoices that are not for the purpose of defrauding taxes can also be convicted

The act of falsely issuing special VAT invoices for the purpose of not defrauding state taxes may be convicted of the crime of false invoicing

In 2004, defendant Zhang Mouqiang cooperated with others to establish a keel factory of an individual enterprise, and Zhang Mouqiang was responsible for production and operation activities. Because a keel factory was a small-scale taxpayer and could not issue a special VAT invoice for the purchasing unit, Zhang Mouqiang signed a sales contract in the name of Xinyuan Company, which was started by others. From 2006 to 2007, Zhang Mouqiang signed light steel keel sales contracts with 6 companies, and the purchasing units all remitted the purchase price to the account of Xinyuan Company, and Xinyuan Company issued a total of 53 special VAT invoices for the above 6 companies, with a total price and tax of 4457701.36 yuan and a tax amount of 647700.18 yuan. Based on the above facts, a prefecture and municipal people's procuratorate accused defendant Zhang Mouqiang of falsely issuing special VAT invoices.

A people's court of a certain prefecture and city found in the first instance that the defendant Zhang Mouqiang had committed the crime of falsely issuing special VAT invoices, and sentenced Zhang Mouqiang to 3 years' imprisonment, suspended for 5 years, and fined 50,000 yuan below the statutory sentence. Zhang Mouqiang did not appeal within the statutory time limit, and the procuratorate did not protest. A people's court of a certain prefecture or municipality shall report to the Supreme People's Court for approval step by step in accordance with law.

Upon review, the Supreme People's Court held that defendant Zhang Mouqiang signed a sales contract in the name of another unit, and that the unit collected the payment for the goods and issued a special VAT invoice, which did not have the purpose of defrauding the state tax, did not cause losses to the state tax, and his conduct did not constitute the crime of falsely issuing special VAT invoices, and that the people's court of a certain prefecture and city found that Zhang Mouqiang's crime of falsely issuing special VAT invoices was an error in the application of law. Accordingly, the Supreme People's Court ruled that the first-instance criminal judgment of a people's court of a certain prefecture and city should not be approved and revoked, and the case should be remanded for retrial. After the case was retried by a people's court of a certain prefecture and city, Zhang Mouqiang was acquitted in accordance with law.

The Supreme People's Court pointed out in "Typical Significance" that although Zhang Mouqiang's issuance of special VAT invoices for his own enterprises in the name of other enterprises in this case did not conform to the tax laws and regulations at that time, Zhang Mouqiang did not have the purpose of evading taxes, and his behavior did not cause tax losses to the state and did not have social harm. The court of first instance sentenced him to bear criminal responsibility under the statutory sentence and reported it to the Supreme People's Court for approval. Although the defendant did not appeal against the verdict in this case, the Supreme People's Court, based on the modest requirements of the Criminal Law, held that the case should not be convicted and punished, so it did not approve the first-instance judgment, revoked the first-instance judgment, and remanded the case for retrial. In the end, the court of first instance in this case declared Zhang Mouqiang innocent. This is a case published by the Supreme People's Court in the form of a "typical case", and although it does not have the authority of a Guiding Case, its reference value for handling similar cases is self-evident.

Subsequently, on July 22, 2020, the Supreme People's Procuratorate issued the Opinions on Giving Full Play to the Procuratorial Functions and Services to Ensure the "Six Stability" and "Six Guarantees" (hereinafter referred to as the "Opinions"), and Article 6 of the Opinions stipulates: "Prudently handle tax-related cases of enterprises in accordance with the law." Pay attention to grasping the boundary between general tax-related illegal acts and tax-related crimes for the purpose of defrauding state taxes, and for enterprises with actual production and operation activities that falsely issue special vat invoices for non-tax fraud purposes such as inflating performance, financing, loans, etc., and do not cause tax losses, they are not characterized by the crime of falsely issuing special VAT invoices, and where a decision not to prosecute is made in accordance with law, they are transferred to the tax authorities for administrative punishment. Here, the Opinions take whether there is a purpose of defrauding the state tax as the criterion for distinguishing between general tax-related violations and tax-related crimes, and clearly stipulate that the false issuance of special VAT invoices that do not have the purpose of defrauding the state and do not cause losses to state taxes will not be treated as the crime of false vat special invoices. Therefore, the purpose offender theory should be used for the crime of falsely issuing special VAT invoices, which has been made clear by the typical cases of the Supreme People's Court and the Opinions of the Supreme People's Procuratorate, which to a certain extent ends the dispute between the perpetrator and the purpose in judicial practice.

Then, the act of falsely issuing special VAT invoices for the purpose of not defrauding the state of taxes does not constitute the crime of falsely issuing special VAT invoices, can it constitute the crime of false invoicing? Article 205-1 of the Criminal Code provides for the crime of false invoicing, the act of which is expressed as the false issuance of invoices "other than those provided for in Article 205 of this Law". Literally, it seems that the special VAT invoices provided for in article 205 of the Penal Code have been excluded from the "other invoices" here, and therefore cannot constitute the crime of false invoicing. The author believes that the "provision" here means "the provision is a crime". The false issuance of special VAT invoices for the purpose of defrauding the state tax has been made a crime under article 205 of the Criminal Law, and of course cannot constitute the crime of false invoicing. However, the act of falsely issuing special VAT invoices for the purpose of not defrauding state taxes is not a crime under article 205 of the Criminal Law, and can still be included in the constituent elements of "false other invoices" in article 205 of the Criminal Law. Although the crime of false issuance of special VAT invoices cannot be determined for the purpose of fraudulently obtaining state taxes, it can be fully regarded as the crime of false invoicing.

Author: Chen Xingliang (J.D., Liberal Arts Chair Professor, Peking University, Doctoral Supervisor)

Source: Political Science and Law Forum, Criminal Practice Public Account, excerpt from "Political Science and Law Forum" No. 4, 2021 "The Crime of Falsely Issuing Special VAT Invoices: Nature and Definition"