To correct the “invoicing economy”, China’s tax authorities exposed three tax-related cases

China News Service, Beijing, October 19 (Reporter Zhao Jianhua) On the 19th, the State Administration of Taxation of China exposed three cases involving tax-related issues related to the "invoicing economy". The three cases involved Nanchang in Jiangxi, Nanning in Guangxi, and Honghe Prefecture in Yunnan.

In the above-mentioned cases, there are various methods of illegally enjoying financial subsidies by falsely issuing VAT invoices: some places illegally introduce invoicing companies to engage in "invoicing economy" by providing tax refunds; some use fictitious trade "circular invoicing" to trick state-owned enterprises into participating, leading to relevant countries. Some companies face the risk of irrecoverable loans applied to financial institutions; some criminal gangs register in batches shell companies with no actual business premises and no real business. By fabricating business transactions, they artificially inflate business performance and economic data, and obtain huge amounts of industrial support funds and financial rewards.

"Invoicing economy" is not a normal market operation behavior. Through "cyclic invoicing" and "mutual invoicing" between related enterprises, sales revenue is artificially increased, creating the illusion of "digital prosperity." Fan Yong, dean of the School of Finance and Taxation at the Central University of Finance and Economics, analyzed that the companies involved in the case relied on idling of bills to make arbitrage, squeezing the survival space of compliant companies. False transactions can also generate distorted economic data, interfere with macroeconomic research and judgment, and mislead industrial planning and public policy decisions.

According to the State Administration of Taxation, since this year, the tax department has achieved phased results in correcting the "invoicing economy". In the first half of the year, the amount of invoices issued by companies found to have "invoicing economic" problems fell by 37.7% year-on-year. "Shell" companies are accelerating their exit, and the data on business entities is more solid. The creation of huge amounts of revenue out of thin air and false trade are effectively curbed, which is conducive to preventing the industrial chain risks, financial risks and debt risks hidden behind the "digital prosperity".