The impact of the judicial interpretations of the "two supremes" on tax administrative law enforcement

In accordance with the criminal policy of blending leniency and severity, and from the consideration of maximizing the recovery of tax losses, encouraging offenders to turn over a new leaf, and guiding business entities to consciously abide by the tax law, the new judicial interpretations of the Supreme People's Court and the The tax authorities should earnestly implement the relevant provisions and spirit of the judicial interpretation, investigate and deal with tax-related illegal acts in accordance with the law, actively recover tax evasion, strengthen publicity and guidance on tax-related laws and regulations, and supervise taxpayers to comply with tax laws.

On March 18, the Supreme People's Court and the Supreme People's Procuratorate jointly issued the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Administration (Fa Shi [2024] No. 4, hereinafter referred to as the "Interpretation"). On the basis of integrating the judicial interpretations of the Supreme People's Court on the crime of special VAT invoices (Fa Fa [1996] No. 30), the crime of fraudulently obtaining export tax rebates (Fa Shi [2002] No. 30), and the crime of tax evasion and tax resistance (Fa Shi [2002] No. 33), the Interpretation adapts to the practical needs of economic and social development and the reform of the tax system, clarifies the conviction and sentencing standards and handling principles for various crimes endangering tax collection and management, and forms a comprehensive, complete and systematic judicial interpretation of tax-related crimes.

This is an important judicial interpretation on tax-related crimes jointly issued by the Supreme People's Court and the Supreme People's Court in the past 20 years, which will help further consolidate the legal foundation for the prevention and punishment of tax-related violations and crimes, and will have a positive and far-reaching impact on the work of administering taxes according to law and jointly cracking down on tax-related crimes by multiple departments.

The main content and formulation principles of the Interpretation

In view of the new situation and new situation of economic and social development in recent years, the Interpretation pays full attention to the latest achievements of tax reform in the new era and the upgrading and evolution of the tax system, and comprehensively considers and refines the application of law in the current handling of criminal cases endangering tax collection and management.

There are 22 articles in the full text. Article 18 mainly provides for the illegal and criminal means, constitutive elements, and conviction and sentencing circumstances of crimes such as tax evasion, tax resistance, evasion of tax arrears, fraudulent export tax rebates, and false issuance of special VAT invoices, covering all types of crimes endangering tax collection and administration as provided for in the Criminal Law, and comprehensively refining or optimizing the relevant specific provisions and applicable circumstances. The last four articles mainly provide for the principles for handling accomplices, the standards for conviction and sentencing of unit crimes, the circumstances of lenient punishment and the connection between executions, and the effectiveness of interpretations. The Interpretation mainly embodies the following principles:

First, problem-oriented. With the repeated amendments to the Criminal Law and the continuous development of tax reform, some new issues that need to be clarified urgently have emerged in the current tax-related criminal justice activities. For example, the Amendment VII to the Criminal Law of the People's Republic of China, adopted in February 2009, made major amendments to the provisions on the crime of tax evasion, not only changing the original crime of tax evasion to the crime of tax evasion, adjusting the constitutive elements, but also adding special provisions on not pursuing criminal liability, and the Amendment (VIII) to the Criminal Law of the People's Republic of China, adopted in February 2011, added two new crimes of false invoicing and possession of forged invoices, and abolished the death penalty for the crime of falsely issuing special VAT invoices. With these amendments, issues have arisen such as how to interpret the special provisions on non-prosecution of criminal liability for the crime of tax evasion and the application standards of the two new crimes, such as differences in the understanding of the constitutive elements of the crime of false issuance of special VAT invoices in the theoretical and practical circles, and the understanding of the nature of certain tax-related cases by some law enforcement and judicial organs is sometimes different. At the same time, in recent years, the individual income tax reform implemented to meet the needs of economic and social development, especially the special additional deduction of individual income tax, a series of preferential tax policies, and the reform of electronic invoices, have put forward new topics for criminal justice activities. In the absence of amendments to the law, clarifying these new issues needs to be clarified through judicial interpretations. In response to these problems, the Interpretation makes a series of new provisions based on the level of economic and social development and the actual needs of tax collection and administration.

The second is to keep pace with the times. On the one hand, the Interpretation adapts to the needs of economic and social development, and reasonably adjusts the conviction and sentencing standards for relevant crimes in the original relevant judicial interpretations. For example, the starting standard for calculating the conviction amount of the crime of tax evasion has been increased from 10,000 yuan to 100,000 yuan as stipulated in the original judicial interpretation, and the calculation basis and determination method of such items as "the amount of tax evaded", "the amount of tax payable" and "the percentage of the amount of tax evaded in the amount of tax payable" have been further clarified (e.g., it has been clarified that the "tax payable" involved in the crime of tax evasion does not include the value-added tax and customs duties collected by the customs and the amount of tax prepaid by taxpayers in accordance with the law). On the other hand, it is necessary to respond to new situations and trends in tax-related violations and crimes in a timely manner. For example, in recent years, the Interpretation clarifies these new illegal and criminal means as conviction circumstances for tax evasion by signing "yin-yang contracts" and tampering with electronic invoice information in some industries in recent years, so as to meet the needs of punishing tax-related violations and crimes under the new situation.

The third is to combine leniency with severity. In accordance with the principle of unity of subjectivity and objectivity, the Interpretation clarifies the criminal punishment policy for tax-related crimes that combines leniency and severity. For example, the relevant provisions of the Criminal Law on not pursuing criminal liability for the crime of tax evasion are further clarified, which not only demonstrates the clear orientation of severely punishing the crime of tax evasion in accordance with the law, but also pays attention to recovering tax losses to the greatest extent, encouraging offenders to turn over a new leaf, and guiding business entities to consciously abide by the tax law. Another example is to stipulate the time limit for taxpayers to pay back taxes until the public security organs file a case, clarify that the time limit for back tax payment includes the time limit for postponement and installment payment approved by the tax authorities, urge taxpayers to actively pay back taxes, and protect their legitimate rights and interests in accordance with the law, and give full play to the institutional effect of combining criminal justice warnings and punishments.

The impact of the Interpretation on tax administrative law enforcement

Although the Judicial Interpretation on Tax-related Crimes is a relevant provision on the application of law in the handling of criminal cases, the Interpretation is not only the legal basis for cracking down on tax-related crimes, but also an important institutional basis for the work of tax administrative law enforcement and the "connection of executions" in the current work mode of the integration of administrative law enforcement and criminal justice in the mainland to crack down on tax-related crimes. In the author's opinion, the impact of the Interpretation on tax administrative law enforcement is mainly reflected in the following aspects:

The first is to include new illegal and criminal means in the scope of convictions, and strengthen the punishment of new types of tax-related illegal and criminal acts. In terms of the crime of tax evasion, it is clear that acts such as concealing or decomposing income and property in the name of others through the signing of "yin-yang contracts" and other forms, falsely listing expenditures, falsely crediting input tax or falsely reporting special additional deductions, and providing false materials to defraud tax incentives are illegal and criminal means. In terms of the crime of fraudulently obtaining export tax rebates, it is clear that the acts of fraudulently using other people's export business to declare export tax rebates, circulating import and export to fraudulently obtain tax rebates, and falsely reporting product functions and uses to enjoy export tax rebate policies in violation of regulations are clearly illegal and criminal means. In terms of the crime of false issuance of special VAT invoices, it is clarified that the issuance of special VAT invoices by fictitious transaction entities and the illegal tampering with electronic information related to special VAT invoices are illegal and criminal means. In the process of tax law enforcement, the tax authorities should pay attention to such new types of illegal and criminal acts, and increase administrative law enforcement and investigation and punishment according to law.

The second is to adjust the conviction and sentencing standards for crimes endangering tax collection and management, to meet the needs of economic and social development and tax collection and management. The Interpretation closely focuses on the social harmfulness of acts that endanger tax collection and administration, and clarifies the relevant standards for conviction and sentencing in light of the characteristics of tax crimes and the relevant provisions of the judicial interpretations on economic crimes. On the one hand, appropriately increase the standards for conviction and sentencing as provided for in the original relevant judicial interpretations, and on the other hand, refer to the "Provisions on Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II)", which was newly revised and implemented in 2022, to further clarify the relevant sentencing standards. In addition, determine comprehensive conviction and sentencing standards, for example, for the crime of illegally manufacturing or illegally selling invoices, the conviction and sentencing standards comprehensively consider multiple factors such as the number of invoices, the amount of invoices, and illegal profits, to increase the scientificity and reasonableness of the conviction and sentencing standards. In the process of tax law enforcement, the tax authorities should refer to the new conviction and sentencing standards to determine whether the tax-related illegal acts are suspected of crimes, so as to carry out the work of "connecting executions" in accordance with the law.

The third is to clarify the relevant policies for dealing with crimes that endanger tax collection and management, and implement the judicial principle that the crime and punishment are commensurate with the crime. The Interpretation takes criminal punishment as a foothold, takes into account the needs of criminal justice and tax administrative law enforcement, and pays attention to distinguishing between tax criminal offenses and administrative violations, so that the punishment is appropriate to the crime and the severity is severe. For example, it is clearly stipulated that if the perpetrator pays back taxes, recovers tax losses, and effectively complies with the rectification, he may be given a lenient punishment, and if the circumstances of the crime are minor and do not require a criminal punishment, he may not be prosecuted or be exempted from criminal punishment. Another example is that taxpayers who have evaded the payment of taxes shall not be investigated for criminal liability as long as they make up the tax payable and pay the late fees before the public security organ files the case, and fully fulfills the administrative penalty decision made by the tax authorities. In addition, the Interpretation also clarifies the principles for dealing with complicity and unit crimes in tax-related crimes, and maintains the order of tax collection and administration and the security of national taxation in accordance with the law. In the process of tax law enforcement, it is necessary to continue to optimize law enforcement methods, strengthen the publicity and guidance of tax-related laws and regulations through the in-depth implementation of "reasoned law enforcement", supervise taxpayers to timely implement tax administrative punishment decisions, and create a lenient and moderate, fair and just tax legal environment.

Fourth, it is necessary to refine the specific requirements such as the reverse "execution linkage" and further clarify the responsibilities of the tax authorities. The Administrative Punishment Law clarifies that if an administrative organ discovers that an illegal act is suspected of a crime, it shall promptly transfer it to the judicial organ for investigation of criminal responsibility in accordance with law. The Interpretation goes hand in hand with this and further clarifies the relevant provisions on the transfer of relevant cases by judicial organs to administrative organs for handling, that is, if the relevant acts are not prosecuted or exempted from criminal punishment, but it is necessary to give administrative punishment, governmental sanctions, or other sanctions, they shall be transferred to the relevant competent authorities for handling in accordance with law. The relevant competent organs shall promptly notify the people's procuratorate and people's court of the outcome of the disposition. On the one hand, the provisions clarify the specific requirements for the reverse "execution linkage" to form a closed-loop management, and on the other hand, it clarifies the legal responsibility of the competent authorities to handle the matter in a timely manner and give feedback to the judicial organs on the outcome of the handling. In addition, the Interpretation stipulates that if a taxpayer evades the payment of taxes and the tax authorities fail to issue a recovery notice in accordance with the law, the taxpayer shall not be investigated for criminal liability in accordance with the law. The purpose of this provision is to urge the tax authorities to promptly discover and investigate tax evasion and put forward higher requirements for tax work. In the course of tax supervision and law enforcement, the tax authorities should fulfill their duties and responsibilities in accordance with the law, promptly investigate and deal with tax-related illegal acts, and actively recover tax evasion; handle the cases transferred by the judicial organs in a timely manner in accordance with laws and regulations, and do a good job in communicating and giving feedback, so as to prevent dereliction of duty.

In general, the promulgation and implementation of the "Interpretation" will provide a more effective legal guarantee for the administration of taxation and administration according to law, and the tax authorities should take this opportunity to further improve the legal basis of taxation, comprehensively strengthen tax supervision and tax inspection, adhere to strict norms, fair and civilized law enforcement, give full play to the role of the multi-departmental joint crackdown on tax-related violations and crimes, punish all kinds of tax-related violations and crimes according to law, and make every effort to maintain the economic and tax order, national tax security and social fairness and justice.

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Source of this article: China Tax News, author Zhang Changfei (Director of the System Division of the Inspection Bureau of the State Administration of Taxation), pay attention to [Ming Tax] to subscribe to more content.