Looking At China's Tax System From Major Invoice Cases

In November 29, 2005, the Changsha Municipal Public Security Bureau, the State Administration of Taxation and the Local Taxation Bureau jointly announced the largest "1.13" fake invoice cases that have been cracked since the founding of the people's Republic of China. The counterfeit invoice value of the fake invoices was as high as 341 billion 170 million yuan.

Why invoice management is full of loopholes?

Why do false invoices become a problem that the public security organs have repeatedly banned, but have no alternative?

From the case of invoice, we see the drawbacks of China's tax system. Li Jiyou / Changsha's false invoices have been cracked, and fake invoices have become a topic of discussion among many people.

Six of the ten major tax related cases published by the State Administration of Taxation in 2004 were the act of making and selling fake invoices. The rampant false invoices have seriously affected the social and economic order of our country.

Obviously, there must be a huge demand market behind the criminals making fake invoices crazily. So why do so many enterprises take the risk of buying fake invoices to achieve the purpose of evading taxes?

The author believes that there are three reasons: first, the unreasonable nature of the current tax system causes taxpayers to bear too much burden and seriously exceed their affordability.

Secondly, the tax system of invoicing tax in China has great loopholes.

Third, the tax collection and management system is unreasonable.

The root of the problem is: the taxpayers' tax burden is too heavy, and the tax levers are out of balance. The current tax system in our country emphasizes the "enrichment" function of the tax revenue without considering the affordability of the taxpayers, which increases the tax revenue on the surface, which actually runs counter to the tax burden.

As an important basis for financial accounting and tax inspection, invoices become the key chain to decide taxpayers' tax payment.

The amount of deductible invoice will directly affect the taxable amount of the main taxes payable by the enterprise.

In terms of value-added tax, because of the limitations of some industries, some enterprises have very little input tax, such as the coal industry, which leads to a heavy burden on corporate value-added tax, which is seriously beyond the psychological endurance of enterprises.

In order to lighten the tax burden, enterprises should obtain the VAT invoices at any cost, and malicious deduct the input tax so as to achieve the purpose of less taxes.

In terms of corporate income tax, the State adopts the method of deducting income tax before tax, but it also restricts the items and standards of pre tax deduction of enterprise income tax.

Thus, under the premise that 33% of the tax rate has already been high, many business activities such as commercial rebates can not be deducted before the income tax.

In addition, the national standards for deductions are also out of line with the actual situation. For example, the wages paid to employees by the actual enterprises have far exceeded the deduction standard of the tax paid wages. The more part will be subject to tax adjustment, which will increase the tax burden of enterprises. Some enterprises will use the excess part to reimburse them to the employees, which indirectly leads to the purchase of invoices by enterprises.

In terms of business tax, there is also a heavy burden on taxpayers, such as the tax rate of most entertainment enterprises is 20%.

However, according to the survey, the psychological burden of entertainment enterprises is not more than 5%.

Facing the relatively high tax burden, it is common for entertainment industry to issue false invoices for customers.

The ability of customers to identify fake invoices is also very limited. In most cases, the authenticity of invoices can not be identified.

In short, the overall burden of Taxation on enterprises is too heavy for enterprises to bear heavy burden on enterprises.

Under such circumstances, some enterprises try their best to increase the cost and expenses and conceal their income.

The special function of invoices in financial accounting and tax inspection makes it an important means for enterprises to evade taxes and can be covered with "legal cloak". Under the condition that formal invoices are more difficult, fake invoices come into play and form a huge "demand market".

The "invoice tax" is full of loopholes. Invoice tax is urgently needed to solve. The invoice is the original evidence of financial accounting and the important basis for tax inspection. Due to overemphasizing the "ticket tax deduction", the invoice becomes the only evidence for commercial activities between enterprises. As long as the invoice is obtained, it represents the existence or end of a business activity.

In this way, the invoice becomes the most important chain in the whole tax system, and it is also the weakest link.

The whole enterprise's income and expenditure will be changed because of the receipt of the invoice. If the enterprise wants to evade taxes, if it gets the invoice, it will be all right.

Huge economic benefits induce enterprises to do everything possible to get invoices.

In addition, some industries do not need or seldom invoice because of the group's particularity.

If the decoration industry, some enterprises will take the "do not open the bill is not accounted for" situation, hidden income becomes very easy.

Because of the fact that tax authorities in China generally have "tax inspection tickets", they do not supervise the operation of enterprises and the budgets of funds, resulting in the loss of state revenue.

In some western countries, invoices are not the only proof of business activities.

In addition to the supervision of invoices, the state stipulates that enterprises do not allow large amounts of cash to be used in business activities. The inflow and outflow of funds in business activities must be carried out through banks, and tax authorities monitor the inflow and outflow of enterprises through banks.

This ensures the authenticity of business activities and weakens the status of "one ticket and thousands of gold" of invoices, so that the invoice is resumed only as a "written proof".

Under the tax of invoices, it is impossible for the government to manage the tax according to law, because the legality of the invoice is still open to question.

Under the tax of invoices, taxes can not really react to the economy.

Because of the defects of invoices, taxpayers' "forgery, alteration, concealment, unauthorized destruction of account books, accounting vouchers, or more or less or less income in the account books, or refusing to declare by tax authorities, or making false tax declarations, or paying taxes or paying less taxes" always exist and can not be avoided.

The tax collection and management system is unreasonable. At present, there are many unreasonable ways of tax collection and management in China.

The main idea is that the tax system is designed from the perspective of convenient management, not from the perspective of convenience to the people and the convenience of enterprises.

For example, in the current way of personal income tax collection, the unit adopts the form of "one size fits all".

Under such circumstances, individuals who are more burdens on families have to pay more by replacing invoices and deducting the cost of wages, thereby reducing the amount of wages and achieving less personal income tax purposes.

To sum up, in order to fundamentally solve the problem of false invoices, we must fundamentally eliminate the "demand market" of fake invoices.

This needs to be changed in the design concept of tax system and collection and management mode, lighten the heavy burden of taxpayers, and rationally design the collection process and collection method. Only by solving many drawbacks in the tax system can we really achieve tax administration in accordance with the law.

A (the chairman of the board of directors of Beijing Zhi Tong Zhen industrial tax planning Co., Ltd.), from the false invoices case, sees the reasonableness of the tax system of our invoice.

However, we should see a phenomenon that at least half of the ten major tax related illegal cases published by the State Administration of taxation are illegal invoices for sale, false invoices or other invoices, which makes us have to consider such a question: what is the relationship between the invoice system of the national tax revenue and the current rampant fake invoices in order to strengthen financial management in the system design?

How much can the existence of invoice tax system play?

We have reason to question the reasonableness of invoice tax.

Is the invoice tax reasonable?

China's current tax revenue is mainly based on invoices to carry and reflect the tax revenue system, commonly known as the invoice tax.

Under the invoice tax, not only tax voucher, but also tax refund.

Although the invoice is an important basis for taxation in our country, the invoice is not the real legal evidence. It is necessary to really verify the legality and authenticity of the economic activity itself, only to compare the real exchange and actual operation of the money fund.

In any case, invoices are not the key to pfer, prosecution and sentencing.

It can be seen that it is precisely because of the characteristics of the invoice that the invoice tax system is basically unreasonable.

It is precisely because of the existence of the invoice tax system that the root causes the repeated prohibition of false invoices and fraudulent practices and the damage of taxpayers' legitimate interests.

To sum up, the unreasonable invoice tax is mainly reflected in two aspects: first, under the invoice tax system, the invoice is the only "legal" tax basis for determining the tax burden of taxpayers.

Taxpayers have the natural nature of reducing tax expenditure and safeguarding their own interests, that is, the pursuit of maximizing their own interests.

It is precisely because of the fact that the current taxpayer's use of false invoices or "genuine tickets and false use" (which we all call false invoices) is far greater than the cost. The so-called "black demand" of some taxpayers for fake invoices will inevitably lead to the drumbeating of invoice fraud and trafficking.

Secondly, the existence of false invoices under the invoice tax system has caused taxpayers to bear some of the responsibilities that should be borne by the state, resulting in unnecessary losses of their own interests.

In order to safeguard its own tax revenue and ensure the timely collection of tax revenue, the state also directly stipulates that taxpayers can not obtain all kinds of false invoices as tax vouchers for tax deduction, but do not distinguish the subjective wishes of taxpayers from obtaining fake invoices and whether or not they do exist.

Such a simple one size fits all rule can, to a certain extent, combat taxpayers' demand for fake invoices, but this policy guidance that focuses only on the authenticity of invoices and does not value the business itself is precisely the embodiment and enhancement of the tax system of the tax invoice. Therefore, the responsibility to control the fake invoices that the tax authorities should bear is pferred to the taxpayer, and the taxpayer has an additional obligation to distinguish the true and false invoices.

Under such a system, taxpayers may not be able to legally deduct the original business due to obtaining false invoices under the condition of no precaution, and virtually bear the economic losses of obtaining false invoices in the case of non subjective wishes.

Once again, the existing invoice tax system has given the invoice too much function, the invoice is the tax, the tax is the invoice.

But the invoice is neither a currency nor a negotiable securities, but it bears the function of money and negotiable securities. It can be said that the function and status are obviously asymmetrical.

This is precisely a major irrationality of the design of the invoice tax system itself.

Correspondingly, the authority of the invoice - the power of the tax authority is limited, and it is also difficult to undertake many important tasks on the shoulder of the invoice.

Therefore, it is difficult to rely on tax authorities to exercise many functions of invoices under the current invoice tax system.

From this point of view, it is not difficult to draw the following conclusion: under the invoice tax system, there is no real sense of tax administration in accordance with the law, because the legality of invoices remains to be discussed.

Under the invoice tax system, taxes can not really react to the economy.

Because of the defects of invoices, taxpayers' tax evasion will always exist and can not be avoided.

Under the invoice tax system, it is impossible to really give priority to efficiency.

Whether manual or Golden Tax projects, the operation of invoices is nothing more than a copy of the operation of money funds.

Therefore, the operation of invoices has always been a duplication and waste.

In the current situation of "being reasonable", how to deal with the false invoices of the existing invoice tax system has questioned the irrationality of the current invoice tax system. We have to think about this question: since our country can not abolish the invoice system at present, how should we straighten out the invoice Market and minimize the possibility of invoice crime in such a reasonable situation?

First, increase the crackdown on criminals who manufacture fake invoices.

At present, the relevant laws of China stipulate that the starting point for the sale of invoices is 25 or more.

In this way, only the number of invoices manufactured by criminals can be investigated for criminal responsibility.

According to the existing legal provisions, the maximum sentence is only 7 years' imprisonment and a fine of more than 50 thousand yuan or less than 500 thousand yuan.

From the point of view of attack, the state is far from enough to punish the fake invoices from the standard of conviction and sentencing.