The Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Administration further clarifies the scope of criminal cases of endangering tax collection and management by analyzing the constitutive elements of the crime. Tax enforcement needs to pay special attention to the adjustment involving the "execution linkage".
The Supreme People's Court and the Supreme People's Procuratorate recently 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"), which has attracted widespread attention. Based on the changes in economic and social development, the Interpretation proceeds from the more effective punishment of tax-related crimes, implements the criminal policy of blending leniency and severity and the principle of legality of crimes, and further clarifies the scope of criminal cases endangering tax collection and management by analyzing the constitutive elements of crimes. The Interpretation is not only an important basis for judicial authorities to investigate tax-related criminal liability, but also an important guide for tax authorities to enforce the law and carry out the work of "connecting executions and executions".
Limit the scope of some criminal cases that endanger tax collection and management
The Interpretation restricts the scope of some criminal cases endangering tax collection and administration, affecting both tax-related criminal and tax administration. There are two aspects that stand out:
The first is to limit the first paragraph of Article 205 of the Criminal Law, which is "the crime of falsely issuing special VAT invoices for fraudulent export tax rebates and tax deductions". According to the second paragraph of Article 10 of the Interpretation, "if the purpose of inflating performance, financing, loans, etc. is not for the purpose of defrauding taxes, and there is no loss caused by tax deception, it shall not be punished as this crime", and some false invoices will be excluded from the "crime of falsely issuing special VAT invoices for fraudulent export tax rebates and tax deductions" because the "purpose of the act" and "harmful results" do not meet the criteria for pursuing criminal liability. The tax authorities will no longer transfer such tax-related violations to the judicial authorities for this crime, and if they are suspected of other crimes, they will be transferred for the corresponding crimes.
The second is to add provisions on non-prosecution for compliance rectification. Paragraph 1 of Article 21 of the Interpretation stipulates: "Where a crime endangering tax collection and administration is committed, causing a loss of state tax revenue, and the perpetrator pays back the tax and recovers the tax loss, and effectively complies with the rectification, he may be given a lenient punishment; This introduces the corporate compliance incentive mechanism into the public prosecution system, and uses it as a statutory reason for leniency or even exemption from criminal punishment. In the process of law enforcement, the tax authorities should actively implement this judicial spirit and guide the administrative counterpart to recover tax losses in a timely manner.
Tax law enforcement should also pay special attention to the second paragraph of Article 21 of the Interpretation, which stipulates that "if the relevant acts specified in this Interpretation are not prosecuted or exempted from criminal punishment, and it is necessary to give administrative penalties, governmental sanctions or other sanctions, they shall be transferred to the relevant competent authorities for handling in accordance with the law." The relevant competent organs shall promptly notify the people's procuratorate and people's court of the outcome of the disposition. This means that after receiving a non-prosecution or exemption from criminal punishment case transferred by the judicial authority, the tax authorities must promptly handle the case in accordance with the law and promptly feedback the results to the judicial authorities.
Expand the scope of some criminal cases that endanger tax collection and management
To standardize the "connection between execution and execution" and ensure that tax-related cases should be transferred to the fullest, the tax authorities also need to pay attention to the fact that the Interpretation expands the scope of some criminal cases that endanger tax collection and management. There are also two aspects that stand out:
The first is to clarify that "providing illegal convenience" may be criminalized.
For a long time, most of the assistance acts related to tax-related violations have been characterized by the tax authorities as "providing illegal convenience" in accordance with Article 93 of the Detailed Rules for the Implementation of the Tax Administration Law, and have been dealt with as administrative penalties. In a few cases, the helper is treated as an accomplice to a criminal offense. As for the act of aiding tax evasion, since Article 201 of the Criminal Law limits the subject of the crime of tax evasion to the taxpayer or the withholding agent, there has been no case in which the "helper is judged to be an accomplice to the tax evasion".
The Interpretation fills the gap of "no criminal liability for helpers". According to Article 19 of the Interpretation, "a person who clearly knows that another person has committed a crime endangering tax collection and administration but still provides him with an account number, credit certificate or other assistance, shall be punished as an accomplice to the corresponding crime." Accordingly, the act of providing illegal convenience for the crime of endangering tax collection and administration may be elevated from an administrative offense to a criminal offense. In addition, according to the second paragraph of Article 9 of the Interpretation, if a specific person (an intermediary organization engaged in freight forwarding, customs declaration, accounting, taxation, comprehensive foreign trade services and its personnel) carries out a specific act of assistance (violating the relevant national regulations on import and export operations by providing false supporting documents to others) and produces a specific result (causing others to defraud the state of export tax rebates, the circumstances are serious), he shall be specifically criminalized (in accordance with Article 229 of the Criminal Law, he shall be investigated for criminal responsibility for the crime of providing false supporting documents).
The second is to determine that the crime of tax fraud is committed by acts, not by consequences.
In law enforcement practice, both the Tax Collection and Administration Law and the Criminal Law use "the result of defrauding the state of export tax rebates" as the basis for imposing administrative penalties and criminal liability for tax fraud, and no liability will be pursued if no harmful result is caused. However, in practice, with the gradual accumulation of experience of law enforcers and the continuous improvement of law enforcement technology, more and more tax fraud behaviors are discovered by the tax authorities in a timely manner at the stage of tax refund application review. Although this protects the country's tax revenue, it is impossible to sanction the offender because the harmful results have not occurred, and some criminals have taken the opportunity to continue to try to cheat taxes, and the auditors are tired of coping, and a little carelessness may allow them to succeed, forming a potential risk.
The Interpretation amends the legislative concept and stipulates in the first paragraph of Article 9 that "a person who commits an act of fraudulently obtaining export tax rebates from the state without actually obtaining export tax rebates may be punished lightly or commuted by reference to the completed offense." At this point, as long as the tax fraud is completed, whether or not the tax fraud is actually obtained, it constitutes the crime of tax fraud.
Refine the criteria for criminalizing conduct that is hotly debated
In addition to the above-mentioned significant adjustments, the Interpretation also enumerates the specific manifestations of criminal acts in light of the new circumstances of crimes endangering tax collection and administration, so as to clarify the boundary between crime and non-crime.
For example, Article 6 of the Interpretation for the first time identifies "failure to perform tax obligations and escape from the supervision of tax authorities" as one of the "means of transferring or concealing property" as stipulated in Article 203 of the Criminal Law, and includes passive and uncooperative taxpayers in tax arrears into the scope of punishment for the crime of "evading the recovery of tax arrears".
For another example, Article 1 of the Interpretation not only classifies the means of tax evasion by taxpayers and withholding agents, but also emphasizes in paragraph 3 that "the withholding agent undertakes to pay the tax on behalf of the taxpayer, and when it pays the after-tax income to the taxpayer, it shall be deemed that the withholding agent has 'withheld or collected'". Where the amount of tax collected is relatively large, it shall be convicted and punished in accordance with the provisions of the Criminal Law on the crime of tax evasion.
In general, the Interpretation provides an important reference for tax authorities to enforce the law, and also puts forward higher requirements for tax enforcement. Tax cadres need to study carefully, promote law enforcement norms, and avoid law enforcement risks.
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Source of this article: China Tax News, author: Zhang Ting, the author is a public lawyer of the Hainan Provincial Taxation Bureau of the State Administration of Taxation.