Strengthening Tax Supervision and Tax Audit

The STA further deepened the dynamic supervision based on “credit + risk”, and implemented differentiated service and supervision, to achieve efficiency in supervision to the maximum extent and disturbance on taxpayers to the minimum degree. The risk-based inspection mechanism of “Double Randoms and One Public” has been deepened to focus on the random inspection on key tax source enterprises. The STA actively promoted co-governance in revenue collection and optimized the regular working mechanism in combating tax fraud with joint efforts of six ministries and cracked down on fraudulent VAT credit refund. In 2022, 202.7 thousand companies suspected of issuing false invoices were inspected, involving a total tax of 135.31 billion yuan. The STA has also audited 2,144 export companies, leading to the retrieval of 7.321 billion yuan in tax losses. The STA cooperated with the public security departments and took 8,339 suspects into custody and 903 suspects voluntarily turned themselves in. The STA has also worked on solving the supervision difficulties in invoice issuance to improve tax administration.The STA continuously regulated the entertainment and internet broadcasting industry and conducted investigations and exposed tax evasion cases involving several celebrities, forming a five-step method of alerting risks, supervising problem solving, warning visit, building tax audit cases and public exposure, to achieve the integration of enforcement strength and intensity. Overall, the STA has achieved a good result.

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The “Five-Step Method”

In 2021, the STA investigated tax evasion cases involving celebrities such as Zheng Shuang,Huang Wei. Enhancing the regulation on the entertainment and internet broadcasting industry,it explored and formed the “Five-Step Method”of alerting risks, supervising problem-solving,warning visit, building tax audit cases and public exposure. Based on big data analysis,tax authorities first send alerts to taxpayers with potential tax risks and ask taxpayers to rectify mistakes. Then tax authorities may visit these taxpayers. If the taxpayers do not cooperate,tax authorities will perform audits. Cases with serious implications and bad social influence will be exposed to the public. As a result,the comprehensive effects of enhancing the accuracy of the crackdown, reducing the cost of law enforcement and forming a strong deterrent to criminals can be achieved.

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The Regular Working Mechanism on Combatting Illegal Invoicing and Fraudulent Tax Refund with Joint Efforts of Multiple Ministries

Since August 2018, cooperating with the Ministry of Public Security, the General Administration of Customs, and the People’s Bank of China, the STA has launched the special action of attacking the “fake enterprise” issuing invoices without business substance, “fake export” without actual export transactions, as well as “fake filing”, effectively regulating the taxation order of key industries and key areas. For example,in the area with potential high tax risk such as agricultural products and used materials, the case rate has been decreased. Accordingly, the STA invited the People’s Procuratorate and the State Administration of Foreign Exchange to join the mechanism, which has transformed from an occasional four-ministries mechanism to a regular six-ministries mechanism, and realized the transfer from concentrated fighting to ongoing attack on “fake enterprise”, “fake export” and“fake filing”. In June 2023, the Supreme People’s Court participated in the mechanism as well.