Ni Bin
Partner of Jiangsu Optimus Optimus Law Firm, President of Yangzhou Bankruptcy Administrators Association
Objectives
First, both public and private - the evolution of online auctions
2. Tracing the Origin of Precedents - Summarizing the Evolution of Commitment
Third, the trade-off of pros and cons - the evaluation of tax agreements
epilogue
The online auction of bankruptcy estate is an important way to realize the bankruptcy estate, and the principle of taxation shall be followed. The practice of stipulating that all taxes and fees shall be borne by the buyer in the announcement of the auction of the bankruptcy estate violates the principle of taxation and statutory law of the tax collection and management law, nor does it meet the requirements of the Bankruptcy Law on the diligence and diligence of the administrator. In practice, this practice should be avoided and borne by the corresponding subjects in accordance with the provisions of laws and administrative regulations.
The management and conversion of the estate is a very important part of the insolvency proceedings (especially the liquidation proceedings), and the appropriate disposal measures of the estate are directly related to the openness, fairness, impartiality and efficiency of the insolvency proceedings. At present, the disposal of assets enforced by the people's courts has all adopted the method of online auction, and the disposal of bankruptcy estates is increasingly carried out by online auction under the initiative of the Supreme People's Court and the guidance of the people's courts at all levels. After two transitional stages, the online auction of bankruptcy estate has entered the mature stage of independent auction issuance by the administrator after two transitional stages, namely, the disposal of the bankruptcy estate on the court enforcement online auction platform.
The State Administration of Taxation believes that taxpayers should declare and pay taxes on all income from auctioned property in accordance with law; the people's courts should assist tax authorities in collecting taxes from auction income on a priority basis in accordance with law. However, the way of handling in judicial practice is inconsistent with the spirit of this provision, and the auction announcement often states that the buyer must bear all taxes and fees in the auction. The Provisions of the Supreme People's Court on Several Issues Concerning online judicial auctions of people's courts, which came into effect in 2017, once again clarified the principle of each tax burden being borne by each other according to law, and the State Administration of Taxation also reiterated it in relevant documents. However, in judicial practice, it has not been strictly implemented.
Although the online auction of the bankruptcy estate has some characteristics of judicial auction, it is not a judicial auction in the strict sense. Whether the online auction of the bankruptcy estate can stipulate that all taxes and fees arising from the auction shall be borne by the buyer, or the principle of statutory taxation shall be strictly implemented with reference to the relevant provisions of the online judicial auction. This article hopes to be helpful to the practice of online auctions of the administrator's bankruptcy estate through the discussion of this issue.
In the early days, the main body of the online auction of the bankruptcy estate was the enforcement department of the court, and the disposal platform was the platform for the execution of the online auction; later, it developed into the administrator acting as the main body of the auction, using the bankruptcy asset disposal channel set up on the platform to exercise its authority. With the improvement of various technical conditions, at present, the administrator can register accounts in his own name on qualified online auction platforms such as Taobao and JD.com, and independently hang up the bankruptcy estate. Courts are gradually returning to their role as supervisors. However, there are only a few norms on the mainland for the specific adjustment of this issue. In 2019, the Beijing Higher People's Court and the Chongqing Higher People's Court successively promulgated the Implementation Measures for Online Auction of Property in Bankruptcy Proceedings (Trial Implementation), which clarified the core position of the administrator in the process of property disposal and the principle of giving priority to the use of online auction disposal.
The online auction of the bankruptcy estate by the administrator is not only the authorization of Article 25, Item 6 of the Enterprise Bankruptcy Law, but also the duty stipulated in the Law. Since the promulgation and implementation of the Enterprise Bankruptcy Law, the situation of liquidation groups composed mainly of personnel from government agencies serving as administrators has gradually decreased, while the situation of market-oriented entities such as intermediary institutions acting as administrators has become more and more common, which reflects the trend of gradual development from public power intervention to market-oriented operation in the development of mainland bankruptcy law. The autonomy of creditors should be fully guaranteed in the process of disposing of the estate, while being limited by social interests. According to this enterprise bankruptcy law, the administrator shall prepare a plan for the conversion of the bankruptcy estate and submit it to the creditors' meeting for voting. This provision makes the insolvency law reflect the character of private law in addition to the public law attribute. However, the administrator's power to administer and dispose of the estate requires appointment by the court and authorization under the enterprise insolvency law, in addition to the delegation of the creditors' meeting. This shows that the online auction of the bankruptcy estate is not a private law act in the full sense, and we cannot influence our judgment on this issue with the idea of "no law is prohibited".
Judging from the public information that can be examined, the earliest agreed tax liability and the effect of which has been judicially confirmed is Taiyuan Heavy Machinery (Group) Co., Ltd. (hereinafter referred to as Taizhong Company). In 2002, Taihetai Company and Shanxi Jiahetai Real Estate Development Co., Ltd. (hereinafter referred to as Jiahetai Company) agreed that Taizhong Company would transfer about 64.5 mu of land to Jiahetai Company for the development of shops and residences, and go through the transfer procedures, and Jiahetai Company would pay a land compensation of 940,000 yuan per mu (excluding land transfer fees and related taxes). Subsequently, the two parties agreed that the land circulation tax should be borne in the proportion of 76% of Taihe Company and 24% of Jiahetai Company; all other taxes and fees (land value-added tax, transaction tax, etc.) shall be borne by Jiahetai Company; and the above taxes and fees paid in the name of Taihetai Company shall be paid by Jiahetai Company in full to Taihetai Company. In 2006, Taizhong Company filed a civil lawsuit with the Shanxi Higher People's Court, requesting Jiahetai Company to pay land compensation, related taxes and fees totaling more than 35.48 million yuan and liquidated damages.
In response to the dispute over the tax issue in this case, the Shanxi Provincial High People's Court held that the parties' agreement on tax did not violate the mandatory provisions of laws and regulations. The compensation paid by Jiahetai Company to Taizhong Company is the price excluding tax agreed by the two parties, and the two parties agreed that all kinds of taxes shall be borne by Jiahetai Company, so on January 22, 2007, Jinmin Chuzi No. 20 Civil Judgment was rendered (2006), which supported Taihetai Company's litigation claims. After the judgment, both parties appealed, and the Supreme People's Court rendered a final judgment in 2007, holding that the supplementary agreement clarified the issue of how and by whom the taxes and fees for the transfer of land use rights should be borne. Although the mainland tax administration laws and regulations clearly stipulate the taxpayer for the collection of various taxes, it does not prohibit the taxpayer from agreeing with the contract counterparty or a third party to pay taxes. The tax law stipulates the type of tax, tax rate and amount of tax, but there is no mandatory or prohibitive provision on who actually pays the tax. Therefore, the agreement on tax burden does not violate the laws and regulations on tax administration and is legal and valid. Therefore, it does not support The claim that the agreement on the tax burden is illegal and invalid, and it is ordered to pay business tax.
The case was later included in the Gazette of the Supreme People's Court of the People's Republic of China, which contained the judgment on the validity of the tax burden agreement, and was later transplanted to the judicial auction of bankruptcy cases. For example, on July 13, 2015, the (2015) Shaoyuepao Shang Chu zi No. 189 Civil Judgment rendered by the Yuecheng District People's Court of Shaoxing City, Zhejiang Province, in which Zhejiang Elpac Packaging Material Co., Ltd. v. Zhejiang Houde Packaging Material Co., Ltd. was heard by the Yuecheng District People's Court of Shaoxing City, Zhejiang Province, which supported the administrator's claim to order the buyer of movable property such as equipment and vehicles to pay off the corresponding taxes in accordance with the agreement.
The above-mentioned adjudication views are then grafted and used in cases where the administrator entrusts himself to auction the bankruptcy estate online. For example, in the case of the dispute between Xianyang Nanyang Real Estate Development Co., Ltd. (hereinafter referred to as Nanyang Company) and Xianyang Jingwei Textile Machinery Co., Ltd. over the external collection of creditor's rights, heard by the Intermediate People's Court of Xianyang City, Shaanxi Province, on December 7, 2019, the (2019) Shaanxi 04 Min Chu No. 148 Civil Judgment was rendered, holding that the Auction Announcement stated that all taxes and fees involved in the transfer process were borne by the buyer, and that unspecified potential bidders would generally understand it as a "net worth auction" in which the seller did not bear all taxes and fees. Therefore, according to the above-mentioned judgment point of view, the plaintiff's claim to order the defendant to repay the advance transaction tax of more than 7.52 million yuan was supported. Nanyang Company appealed, and the Shaanxi Higher People's Court upheld the original judgment in the second instance. Nanyang Company also applied to the Supreme People's Court for a retrial, which was also rejected.
The conclusion of this case has made many managers believe that they have the "sword of Shangfang", so the "net value auction" seems to have become the best means of disposing of the bankruptcy estate that is both convenient and exempt from liability.
Although the effect of the tax blanket bearing agreement generated by the online auction of the bankruptcy estate has been affirmed by some judicial precedents, and has been favored by many administrators, while seeing that the tax summary acceptance agreement has the characteristics of simplicity and convenience, we should also see the drawbacks of this method, especially the risks faced by the manager.
From a technical point of view, it is difficult to undertake information disclosure in general
The mainland's tax system itself is quite complex, the administrator may not have specialized talents in taxation, and there are many types of taxes involved in the disposal of the bankruptcy estate, especially those related to the transfer of real estate, which vary from place to place, and it is difficult to make a comprehensive and specific full disclosure in the auction announcement.
From some auction announcements, the author has seen the following taxes: business tax, income tax, deed tax, land value-added tax, private enterprise value-added tax, stamp duty, education surcharge, levee tax, arable land occupation tax and so on. The names of the costs are also various, and there are many of them, such as: three compensation fees for land acquisition, land acquisition management fees, cultivated land reclamation fees, forest vegetation restoration fees, transaction fees, transfer fees, etc. Moreover, it is an infinite expansion trend, and the property fees, utility bills, and even fines and deductions for motor vehicles owed by the bankrupt enterprise are included in the scope of the buyer's responsibility. If the Administrator does not conduct a detailed investigation, it is inevitable that the disclosure will be missing.
As for how much the tax burden after the auction is completed, even the manager himself cannot calculate it in advance. In particular, in the part of real estate sales involving land value-added tax, since the land value-added tax implements a four-level progressive tax rate, it needs to be calculated by multiplying the value added by the applicable tax rate minus the amount of deduction items multiplied by the quick calculation deduction coefficient method. In the case that all taxes and fees are passed on to the buyer, the transaction amount generated by the online auction is not a reflection of the real transaction price, and if the transaction price is restored, it will enter a circular dilemma, especially for taxes such as land value-added tax, which implement progressive tax rates that exceed the rate of progress, and the appreciation rate and the applicable tax rate may change before and after the restoration. In addition, after the VAT reform, we are faced with another problem: value-added tax is an extra-price tax, and the general tax calculation method is to use the input and output deduction method to calculate and pay. At auction, bidders cannot predict how much tax they will incur if they do not know the amount of tax credits for the owners of the assets. Therefore, even if the buyer consults the local tax department before bidding in accordance with the requirements in the auction announcement, it will inevitably not get accurate results.
On February 14, 2019, there was an "Auction Announcement" on the Taobao judicial auction network platform, which stated that "the amount of taxes and fees is determined between 8.5% and 17.5% of the final transaction price of the online judicial auction", which is a method of calculating the amount of taxes and fees that is almost twice the difference between the high and low, and the buyer cannot grasp it before the transaction, so disclosure is no different from undisclosed. In practice, bankruptcy online auctions have had extreme situations involving taxes and fees accounting for about 40% of the transaction price, and the amount may be as high as tens of millions of yuan. If the buyer's actual tax burden in the future exceeds the upper limit of the forecast range, should the publisher be liable for false disclosure?
Assuming that the administrator only makes general disclosures, it is inevitable that there will be differences in understanding, and even litigation will lead to adverse consequences. For example, on October 19, 2016, the Intermediate People's Court of Chengde City designated Hebei Jiteng Law Firm as the administrator of Hebei All-China Painting Machinery Co., Ltd. (hereinafter referred to as All-China-Wide Company). In March 2017, the manager commissioned the auction company to conduct a total auction of the use rights of the company's office buildings, factories and industrial land. The Auction Rules state: "After the auction is completed, the buyer shall bear the various expenses involving the transfer of the subject matter and various licenses and the transfer of the goods. "After the auction was completed, the buyer Chengde Luying Trading Co., Ltd. (hereinafter referred to as The Lvying Company) had paid all the price to the administrator and obtained the land and housing rights certificate of the all-large company, but there was a disagreement on the payment of taxes when handling the transfer procedures, and the company filed a lawsuit with the Intermediate Court of Chengde City, Hebei Province, requesting that the tax payable by the seller involved in the transfer be confirmed according to law was about 1.6 million yuan (subject to actual delivery), which was paid by the all-large company in the bankruptcy estate. The court of first instance held that the provisions of the Auction Rules on the assumption of various expenses clearly included the tax payable and were in line with trading habits, and accordingly ruled to dismiss LeOn Eng's claims. Law Ying Company was not satisfied with the appeal, but the Higher People's Court of Hebei Province held that the clause in the Auction Rules did not clearly stipulate the tax burden that the buyer and seller should pay according to law, resulting in a disagreement between the two parties on whether the understanding of the "expenses" in the clause included taxes. In the case where the agreement between the buyer and the seller on the transaction tax is not clear, the statutory taxpayer shall bear the tax obligation. The second-instance trial revoked the original judgment on this basis, and changed the judgment to the tax payable by the seller involved in the transfer of the Law Ying Company (the specific amount shall be subject to the tax department's accounting according to law), which shall be borne by the whole large company. The manager of the all-large company was dissatisfied with the application for retrial, which was rejected by the Supreme People's Court.
It can be seen that although the administrator is the original publisher of the auction information in the online auction of the bankruptcy estate, he does not have the final right to interpret the meaning of the provisions on the reminder clause on tax bearing. It is conceivable that in the future, the court's review of the content of the administrator's own auction information disclosure will only become more stringent, and it will not be easy to seek exemption from liability through general disclosure of tax and fee assumptions.
From the perspective of policy orientation, the validity of the general undertaking agreement is doubtful
Since the tax law is an iron law, this move is absolutely not recognized by the tax department, the tax department "recognizes the temple and does not recognize the person", only taxes the taxpayer, if the enterprise enters the bankruptcy procedure, it will seek recourse to the administrator.
For example, in 2010, Foshan Tianqi Enterprise Bankruptcy And Liquidation Service Co., Ltd. (hereinafter referred to as Tianqi Company) was designated by the Nanhai District People's Court of Foshan City to serve as the administrator of Foshan Nanhai Guangyi Hardware Products Co., Ltd. (hereinafter referred to as Guangyi Company). When the Latter Apocalypse Company entrusts the auction company to auction the entire assets of the bankrupt enterprise, the "Entrusted Auction Contract" stipulates that all taxes, fees, etc. incurred in the transfer of the auction subject matter shall be borne by the buyer, and the administrator shall not deduct the above expenses from the auction transaction price, and the auction company shall declare to the bidder in the auction announcement and before the auction.
On April 20, 2011, the Lishui Taxation Branch of the State Taxation Bureau of Nanhai District, Foshan City issued the "Reminder Notice on Urging bankruptcy liquidation and sale of Guangyi assets to declare sales and pay taxes in a timely manner" to Tianqi Company, pointing out that the VAT tax belongs to the "expenses for managing, converting and distributing the debtor's property" stipulated in the Enterprise Bankruptcy Law of the People's Republic of China, and should be included in the bankruptcy expenses to be paid off at any time.
Another example is that in 2016, the Shunyi District People's Court of Beijing Municipality accepted the bankruptcy liquidation application of Beijing Jinzhao Hongye Investment Co., Ltd. (hereinafter referred to as Jinzhao Hongye Company). Previously, the company's land, houses and appurtenances had been auctioned online, and the "Bidding Instructions" stated that the starting price and transaction price at the time of this auction did not include all the fees and taxes incurred by the buyer at the time of delivery and transfer of the auction subject matter. The Shunyi District Taxation Bureau applied for claims to the manager of Jinzhao Hongye Company, and after fruitless communication, filed a lawsuit to the court for a dispute over the confirmation of bankruptcy claims. The first-instance judgment of the Shunyi District People's Court confirmed that the Shunyi District Taxation Bureau enjoyed bankruptcy claims totaling more than 60 million yuan against Jinzhao Hongye Company. Jinzhao Hongye Company was not satisfied with the appeal, and the Third Intermediate People's Court of Beijing Municipality made a second-instance judgment to reject it. The reason for its judgment was that "although all taxes, fees, etc. involved in the subject matter specified in the Notice to Bidding are borne by the buyer, ... It cannot produce the effect of changing the subject of the taxpayer stipulated by law, nor can it prevent the Shunyi District Taxation Bureau from declaring bankruptcy claims to Jinzhao Hongye Company as the tax collection and management department. ”
On September 12, 2005, the State Administration of Taxation sent a reply letter to the Supreme People's Court on Tax Issues Concerning the Compulsory Enforcement of The Property of Persons Subject to Enforcement (Guo Shui Han [2005] No. 869), which pointed out: "In view of the fact that the people's courts actually control the income of taxpayers whose property is auctioned or sold as a result of compulsory enforcement activities, according to Article 5 of the Law of the People's Republic of China on the Administration of Tax Collection, the people's courts shall assist the tax authorities in collecting taxes from the income in accordance with the law. "Extending to the online auction of the bankruptcy estate, the same can be deduced: in view of the fact that the administrator actually controls the income of the taxpayer from the auction and sale of the property due to the property disposal activities, it should also assist the tax authorities to collect taxes from the income in priority in accordance with the law." That is to say, the administrator, as the subject of the act, should bear the same obligations as the court.
In February 2021, the National Development and Reform Commission, the Supreme People's Court, the Ministry of Finance, the State Administration of Taxation and 13 other state organs jointly issued the Opinions on Promoting and Ensuring the Administrator's Lawful Performance of Duties in Bankruptcy Proceedings and Further Optimizing the Business Environment (Fa Gai Cai Jin Regulation [2021] No. 274), which only guarantees the supply of necessary invoices for bankrupt enterprises, writes off the tax arrears of bankrupt enterprises in accordance with the law, facilitates tax cancellation, and supports the restoration of enterprise tax credit. The pre-tax deduction policy for income tax in the implementation of reorganization and settlement has been adjusted accordingly, and no policy changes have occurred to the tax bearer. Moreover, the article still emphasizes that "after the taxation and customs departments have received the principal amount of tax, late fees and fines owed by the bankrupt enterprise in accordance with the law in the bankruptcy liquidation procedure, they shall handle the deposit of the principal amount, late fee and fine of the tax arrears in accordance with the proportion of compensation determined in the property distribution plan approved by the people's court, and write off the outstanding tax principal, late fee and fine in accordance with the law." This also shows that the bankrupt enterprise will still be the main taxpayer in the future, and the administrator cannot circumvent it through information disclosure and pass on taxes.
Judging from the trend of trials, it is difficult to bear the burden of generalization
As mentioned above, the State Administration of Taxation's Reply to Recommendation No. 84717 of the Third Session of the 13th National People's Congress in September 2020 is actually a weather vane, which has released a clear signal against the generalization of tax and fees, and indicates that it has reached a consensus with the Supreme People's Court on this.
Although some supporters of the general undertaking believe that the online auction of the bankruptcy estate organized by the administrator on its own is not a judicial auction, there is no need to apply judicial interpretations such as the Provisions of the Supreme People's Court on Several Issues Concerning the Online Judicial Auction of the People's Courts. However, whether it is analyzed from the legal theory or verified in practice, the court's current adjudication ideas will certainly affect the future trading behavior of the private sector.
As industry insiders have analyzed, "after the VAT reform, if it is still stipulated that all taxes and fees should be borne by the buyer, the difficulties encountered in practice will follow, and the court will enter the cage it has woven." Many places have become aware of this problem, for example, Wenzhou has made corrections and does not allow such regulations to exist. Jiangsu also clearly stipulates that the people's court may not stipulate in the auction announcement that all buyers shall bear the burden. ”
Moreover, for the online auction of bankruptcy estates, the judicial organs are also strengthening supervision to plug loopholes. In 2019, the Beijing Higher People's Court and the Chongqing Higher People's Court successively issued the "Implementation Measures for Online Auction of Property in Bankruptcy Proceedings (Trial)", which stipulates that the taxes and fees that must be borne by the seller shall be reserved in the auction proceeds and declared and paid on behalf of the administrator.
From the perspective of practical results, generalization of responsibility may be counterproductive
The fact that the bankruptcy estate network auction tax is generally borne is enough to show that this method has had many adverse effects on the bankruptcy administration of enterprises.
First, it is not conducive to online auction transactions. On the surface, the administrator adopts the method of general tax bearing in the online auction, which can simplify the bankruptcy administration workflow, facilitate the administrator to formulate a property distribution plan in a timely manner according to the auction results and transaction price, and it is easy to get the creditors to vote and approve. However, due to the uncertainty of the tax burden involved in the bankruptcy estate, it may inhibit the purchase desire of some potential bidders, reduce the efficiency of bidding, and it is difficult for the bankruptcy online auction to be successfully completed, let alone maximize the realization of the interests of the bankruptcy estate. If the taxes and fees arising from the bankruptcy online auction are borne by each other according to law, the buyer only needs to consider the transaction price and the taxes borne by the buyer himself when bidding for the auction. If the taxes arising from the bankruptcy auction are borne by the buyer in general, the buyer's bid for the auction estate must take into account three factors: the transaction price, the buyer's own taxes and fees, and the taxes that should have been borne by the seller. Under normal circumstances, the auction transaction price that the buyer is willing to give will be reduced according to the amount of the seller's tax passed on. In theory, the seller will not gain more because all taxes and fees are borne by the buyer, but in practice, it is more manifested in the buyer's conservative estimates, resulting in a transaction price that is lower than expected. In particular, in recent years, many large-scale production enterprises that have entered bankruptcy liquidation procedures due to the rupture of the capital chain and other reasons still own a considerable number of land and plants, and look forward to revitalizing them as soon as possible through online auctions, promoting the re-flow of resource elements, and attracting bidders. If the administrator adopts the general tax liability method in the online auction, it may inadvertently dig an unfathomable trap for potential bidders, which is contrary to the original intention of the bankruptcy law to protect the business environment.
Second, it is not conducive to tax collection and management. Proponents of generalization of commitment have a point of view: "The tax authorities consider whether the tax can be deposited in a timely manner according to law, and as for who actually bears the burden, the tax authorities have no right to interfere." If the purchaser is willing to pay this money, the tax authorities certainly have no reason to refuse. However, in practice, even if the tax authorities collect such advances, it is impossible to issue tax payment certificates for so-called payers other than taxpayers, and tax authorities and even local governments may be involved in administrative litigation. For example, on May 5, 2014, Liu Lei bid for a house with property rights originally owned by another person on the online auction platform, paid taxes and fees related to the transfer of real estate to the Liushi Branch of the Local Taxation Bureau of Yueqing City, Zhejiang Province, and obtained two tax payment letters stating that the taxpayers were the original property owners. After that, Liu Lei proposed that he was the actual payer of the tax involved in the case, and the tax authority should issue a tax payment certificate to him. The negotiations failed, and Liu Lei successively claimed his rights by applying for reconsideration and initiating litigation. The Yueqing City Local Taxation Bureau was so difficult to prevaricate and even used a tax ticket with the name of "Tax Payment Certificate" at all. Although Liu Lei later provided a recording of the conversation of Zhi Mou, a staff member of the service window of the Liushi Branch Bureau, tried to prove that the other party asked him to sign the name of another person when paying taxes, and submitted an application for witnesses to appear in court to testify, in the end, the prosecution was still rejected or dismissed on the grounds that the subject was unqualified or the procedure was illegal. In fact, you only need to retrieve the video of the tax payment window or identify the signature of the tax payment procedure to find out the truth.
Third, it is not conducive to the advancement of bankruptcy. Although the court hearing some cases held that in the online auction of the bankruptcy estate, the administrator or seller and the intended bidder had reached an agreement through the auction announcement, etc., and the buyer should be ordered to bear all taxes and fees in general according to the contract, there were also cases of repentance or refusal to pay the auction under the pretext of omissions in many clauses, and the manager's slight carelessness would not only lead to the bankruptcy case being difficult to settle in a timely and thorough manner, but also bring the administrator the risk of long-term litigation fatigue or even defeat. Several of the cases mentioned above have shown that the result of the generalization of the tax burden of online auctions is often that the speed is not reached, and the case cannot be closed. For example, in the bankruptcy liquidation case of Guangyi Company, the administrator Tianqi Company, under the continuous urging of the tax authorities, was forced to pay a total of more than 1.12 million yuan of value-added tax to private enterprises. However, this move also violated the bankruptcy estate distribution plan and reduced the proportion of ordinary creditors' rights to be repaid, and the creditor Guangfa Bank Co., Ltd. Foshan Branch filed a lawsuit for administrator liability for this. The bankruptcy estate was auctioned as early as July 2011, but the tax dispute dragged on until February 2017, when the Guangdong Provincial Higher People's Court concluded its second-instance trial.
Fourth, it is not conducive to financial treatment. As mentioned above, some judgments hold that: "Although the mainland tax administration laws and regulations clearly stipulate the taxpayer for the collection of each tax, it does not prohibit the taxpayer from agreeing with the contract counterparty or a third party to pay taxes." The tax law stipulates the type of tax, tax rate and amount of tax, but there is no mandatory or prohibitive provision on who actually pays the tax. The author is negative about this view. As the main source of state revenue, taxation is a compulsory, non-consideration payment and fixed deprivation of citizens' property rights. Whether it is from the perspective of protecting the property rights of citizens or restricting the power of the state, all countries strictly limit and regulate taxation as a matter of legal retention. The basic way a taxpayer fulfills his obligations is by paying taxes to lose property that should have belonged to him. If the buyer must pay the tax in lieu of the obligor who would have been paying the tax without any legal authorization or relief, then the view that "there is no change in the identity of the taxpayer" can only be a word game, and the tax paid by the buyer on behalf of others cannot be recorded for financial treatment. Taking the sale and purchase of real estate as an example, the laws and administrative regulations stipulate that the taxes and fees of the buyer and seller of the real estate are clear, the buyer only needs to bear the deed tax and stamp duty, while the seller must pay value-added tax, urban maintenance and construction tax, education fee surcharge, etc. If the tax is borne in strict accordance with the tax obligations stipulated in the tax law, the bidder can clearly estimate the cost of the auction and dispel the doubts of the unknowable tax, which obviously plays a significant role in promoting the conclusion of the transaction. If the general assumption agreement is found to be valid, can the tax borne by the buyer "on behalf of the buyer be deducted before tax?" If it cannot be deducted, the buyer has spent a sum of money in vain, and in the long run, the bidding will have to consider this part of the additional cost, reduce the transaction price, and if the deduction is allowed, it is not in line with the principles and rules of corporate income tax." This dilemma, which industry insiders fear has become a common reality in online auctions of bankruptcy estates.
Fifth, it is not conducive to standardizing the performance of duties. It is a statutory duty for the manager to be diligent and conscientious and faithful to perform his duties, and the bankruptcy network auction itself is a test of the manager's actual ability and work attitude. Once the agreed tax is borne in a summary, it is more likely that the manager will be shackled and burdened by himself. For example, in 2018, Zhejiang Wuyuan Law Firm accepted the court's appointment as the administrator of Zhejiang Zhongda Transmission Co., Ltd. (hereinafter referred to as Zhongda). Since the plant and land use rights of Jones Day Company have been auctioned, the buyer Jinhua Shangbaiju Property Management Co., Ltd. (hereinafter referred to as the property company) has not paid taxes and fees as required by the announcement. The administrator sued the court, requesting that the property company be ordered to pay taxes and late fees totaling more than 660,000 yuan to the tax authorities, and in order to pull the tax authorities to endorse it, the Jinhua Jindong District Taxation Bureau, which was responsible for tax collection, was also listed as a third party. The Jindong District People's Court of Jinhua City, Zhejiang Province, held that although the property company should perform its corresponding obligations in accordance with the announcement involved in the case, in view of the fact that the tax department did not require the property company to bear the corresponding obligations, the court did not deal with this issue in this case, and accordingly the judgment rejected the administrator's lawsuit. The precondition for a court ruling that the so-called tax authorities require the buyer to be liable is neither legal nor de facto. Because at that time, the Jindong District Taxation Bureau had already declared its creditor's rights to the administrator in accordance with the provisions of the law, and in the case, it showed a posture of refusing to appear in court to respond to the lawsuit, and the final transaction tax could only be withheld by the administrator from the auction proceeds of the bankruptcy estate of Zhongda Company, and the interests of the creditors were bound to be damaged.
Certainty is one of the important indicators of the legalized business environment. When every ordinary commercial activity entity can accurately calculate the cost of its own business behavior and assess the possible risks in advance, then our business environment must have been greatly improved. Finally, to borrow the answer of an industry insider as a summary: the agreement in the auction of the bankruptcy estate to be borne by the buyer is a habitual bad practice of the administrator, and there are hundreds of harms but no benefits. The administrator shall refer to the provisions of the judicial auction and, in subsequent auctions, each of them shall bear the taxes and fees in accordance with the law, and shall no longer require the buyer to bear all the taxes and fees.
