微信链接：
https://www.huashui.com/index.php?m=content&c=index&a=show&catid=45&id=1921
Release Time：2022-01-25 Abstract
With the rapid growth of the high-income persons in mainland China, the demand for high-income groups to save taxes through tax planning is increasing. Correspondingly, local tax authorities have tightened the collection and management of personal income tax, and cases of high-income people being identified as tax evasion or tax adjustment have frequently occurred.
 
This report is compiled based on the analysis and research on the tax collection and administration policies of high-income groups by Huashui, combined with the typical tax-related cases of high-income groups that Huashui has participated in in recent years. The report will demonstrate main tax risk points in mainland and abroad, and put forward targeted compliance suggestions, in order to provide guidance and reference for tax compliance of high-income groups.
 
It should be noted that the "high-income group" mentioned in this report refers to the high-income taxpayers in mainland China in a broad sense, including high-income groups (such as income of more than 10 million yuan) and high-net-worth groups (if applicable. Investment assets of more than 10 million yuan).
 
Table of Contents
 
A. Business characteristics and tax collection and management trends of high-income groups
B. Summary of tax cases for high-income people in 2019-2021
C. Analysis of the tax-related risks in China for high-income persons
D. Analysis of the main overseas tax-related risks of high-income groups
E. 2022 tax compliance advice for high-income earners
 
A. Business characteristics and tax collection and management trends of high-income groups
 
1. Business characteristics of high-income groups
 
First, The types and industries involved in high-income, high-net-worth individuals are very broad. Directors, supervisors, senior managers, professional managers and professional groups, live broadcast, Internet celebrities, games and other industries quickly gathered a large number of high-income people. There are many sources of income for the above-mentioned high-income people. In addition to wages and salaries, there are also property transfer income such as equity and stocks, interest, dividends, bonus income, production and operation income, etc., involving personal income tax, value-added tax, real estate tax, stamp duty, etc. tax.
 
In addition, high-income individuals can invest in a wide variety of assets, including cash and deposits, investment real estate, stocks, bonds, funds, insurance, bank wealth management products, overseas investments and other domestic investments (such as trusts, fund accounts , brokerage asset management, private equity funds, private securities funds, gold, etc.).
 
Second, generally speaking, natural persons are more mobile than legal persons, and the wealth distribution and income sources of high-income individuals are more trans-regional or even international. For example, many high-income individuals generally have domicile, financial Invest, run different businesses, etc.
 
2. Tax collection and management trends for high-income groups
 
(1) The CPC Central Committee and the State Council have gradually strengthened tax collection and management on income distribution issues.
 
Since the State Administration of Taxation first issued the Guoshuifa [2001] No. 57 document in 2001 (now invalid), a series of official guidance have been issued successively regarding collection management, tax assessment and special inspections and other aspects. The Personal Income Tax Law, revised and implemented in 2019, introduced anti-tax avoidance clauses for the first time. From the arm's length principle, controlled foreign enterprise rules, general anti-tax avoidance rules, etc., it provides a strong legal basis for tax authorities to crack down on tax avoidance by natural persons (especially high-income groups). However, since the anti-tax avoidance clauses are preliminary legislation, and most of the clauses are set in principle, coupled with the diversification of income channels and tax avoidance methods for high-net-worth individuals, the anti-tax avoidance work has a long way to go.
 
(2) The focus areas of tax collection and administration are becoming more targeted.
 
On September 18, 2021, in order to implement the requirements of the Central Propaganda Department, the General Office of the State Administration of Taxation requested to strengthen the tax management of officers in the cultural and entertainment field, and to conduct tax risk analysis on a regular basis. It is necessary to guide them to establish an accounting system in accordance with laws and regulations, and use the method of auditing and collecting to declare and pay taxes. Those who can proactively report and promptly correct tax-related issues before the end of 2021 may be given a lighter, mitigated or exempted punishment according to law; those who refuse to cooperate with the tax authority’s investigation, verification, and supervision and rectification work shall be ordered to make rectifications according to the law, and the industry supervisor shall be requested to do so. Departments and industry associations assist in urging corrections; if the circumstances are serious, they must be investigated and punished seriously and in accordance with the law. In addition, it is required to regularly carry out "double random, one public" tax inspections on celebrity artists and network anchors, and increase the deterrence and exposure of typical cases of tax evasion in the entertainment field.
 
The report of the State Council issued on December 21, 2021 pointed out the problems related to the quality of tax collection and management, and raised the issue of tax evasion by applying the approved collection method to high-income persons. Transfer the supervision of tax evasion, add daily monitoring indicators, and improve the ability of precise supervision.
 
(3) Build a five-step working method and improve the supervision method for high-income people
 
The 2021 National Taxation Work Conference will be held in Beijing, summarizing the effective practices for supervising high-income groups with tax-related problems, forming a reminder first, then urging counseling, and then giving a warning, and for those who still refuse to cooperate with rectification after the warning. The investigation was carried out according to the law, and the "five-step work method" that was publicly exposed after investigation and punishment was selected for some cases with serious circumstances and bad influence, which effectively prevented and resolved some hidden risks.
 
(4) Leveraging big data, tax supervision is smarter
 
Compared with companies, tax-related transactions of individuals are more discrete. With the launch of the "Golden Tax" system, the tax collection and management capabilities of tax authorities have been greatly improved through big data, cloud computing, artificial intelligence, and mobile Internet technologies. In addition, through the Common Reporting Standard (“CRS”) proposed by the Overseas Economic Cooperation and Development Organization (“OECD”), the promotion of the domestic personal income tax APP, and the networking of personal information of various departments, more and more personal information, domestic and overseas asset information, credit Information, are included in tax big data.
 
(5) Combined with the tax credit joint punishment mechanism, strengthen the effectiveness of tax supervision
 
Since 2019, China has been vigorously promoting the construction of the "Credit China" system. According to the document issued on August 20, 2019, the State Administration of Taxation uses the identification number of the natural person taxpayer as the unique identifier, and focuses on the records of individual income tax tax declarations, special additional deduction information submission records, violations of credit commitments and violations of laws and regulations. Formulate systems and measures for natural person tax credit management, comprehensively establish a mechanism for natural person tax credit information collection, recording, inquiry, application, restoration, security management and rights protection, form a national natural person tax credit information database, and establish data sharing with the national credit information sharing platform. On top of those measures, joint disciplinary actions are also implemented on parties who are seriously untrustworthy in personal income tax.
 
B. Summary of tax cases for high-income people in 2019-2021
 
1. Overview of tax-related cases among high-income groups in 2019-2021
 
Using "individual" and "assets of more than 10 million yuan" as keywords, we found 15 administrative or criminal cases on the China Judgment Document Network:
l 8 criminal cases, of which 4 involve equity transfer and 4 involve real estate, and high-income individuals in the cases are all found to constitute tax evasion;
l  5 administrative cases, of which 3 involved equity transfer, 1 involved non-monetary asset investment, and 1 involved real estate, and only 1 administrative case was remanded for retrial, and high-income individuals in the other 4 cases lost the lawsuit;
l 2 administrative enforcement cases.
 
One of the reasons for the small number of tax-related litigation cases among high-income groups is that there are a large number of tax-related cases that have not yet entered the litigation process. However, since such cases does not have to be disclosed, public awareness of cases through public channels is limited. Through public channels, we have collected and sorted out a number of major tax-related cases and important cases for high-income people in the non-litigation stage from 2019 to 2021 for reference by high-income people.
 
2. Introduction of tax-related cases for high-income persons in 2019-2021
 
(1) Suspect Bao's "Yin-Yang Contract" concealed the tax evasion case of equity transfer income
 
The tax inspection department of Huainan City, Anhui Province verified that Bao, a shareholder of an Anhui pharmaceutical company, signed an Equity Transfer Agreement with Yin Mou, and transferred 51.09% of the equity of the pharmaceutical company Bao held to Yin Mou. The transfer price is 70 million yuan. Later, Bao forged the Equity Transfer Agreement to file tax returns in order to evade relevant taxes, and underpaid taxes totaling 11.7548 million yuan.
 
The Huainan tax inspection department made a administrative decision to request tax payments and impose a late fee with a fine on Bao, but Bao failed to make the payments on time. The tax department immediately transferred the case to the police for investigation, and Bao was later prosecuted. After entering the judicial process, Bao paid all the taxes.
 
In March 2021, the people's court in Anhui Province ruled that after Bao transferred the equity of a company he held to others, he used deception and concealment to submit false tax returns, and the amount involved was huge. His behavior constituted a crime of tax evasion. Bao was sentenced to four years in prison and fined 500,000 yuan.
 
(2) Tax evasion case of suspect Xia’s partnership business and partnership share transfer
 
Suspect Xiao is an executive partner of a partnership hospital A with a shareholder share of 87.37%, and Xiao is also a partner of a partnership hospital limited company B, with a shareholding ratio of 5%. During the audit, the tax inspection department found that the accounting management of the A partnership hospital where Xiao was a partner was primitive and unable to audit. The income on the account from 2015 to 2020 was 91.0486 million yuan, and the actual income of the cash register system was 101.4122 million yuan. The hidden understated income was 10.3636 million yuan; at the same time, Xiao, as a partner of the hospital B, transferred the share of the partnership, and failed to declare and pay the personal income tax of 144,000 yuan.
 
In this regard, the tax inspection department required suspect Xiao to pay a personal income tax of 2.8343 million yuan on production and operation income and a personal income tax of 144,000 yuan on equity transfer. From the date of the overdue tax payment, 5/10,000 of the overdue tax payment will be collected on a daily basis. A fine of 1,417,200 yuan, 0.5 times, was imposed on Xiao for underpayment of personal income tax on production and operation income.
 
(3) Tax evasion case between Sydney (formerly Zhu Chenhui) and Lin Shanshan
 
From 2019 to 2020, Sydney converted 84.4561 million personal salaries and labor remuneration into operating income by setting up fictitious sole proprietorship. In total, Sydney evaded personal income tax of 30.3695 million yuan. In the end, the tax was recovered, late payment fines were added, and a fine of 1 times was proposed, totaling 65.5531 million yuan.
 
(4) The case of tax evasion by Wu Xiaoquan
 
"Xi'an East China Wanhe City Project" is jointly organized by four affiliated enterprises: Shaanxi GCL Commercial Operation Management Co., Ltd. (registered capital of 20 million yuan), Shaanxi East China Jincheng Property Management Co., Ltd. (registered capital of 5 million yuan), Shaanxi Wanhe Commercial Operation Management Co., Ltd. (registered capital of 5 million yuan) and Shaanxi East China Jincheng Investment and Development Co., Ltd. (registered capital of 30 million yuan). On August 16 and 17, 2017, Wu Xiaoquan, Xiao Tongchun and other 7 people signed two "Equity Transfer Agreements" for the same equity transfer. One contract was used for the registration of equity change with a total of 37.8 million yuan, and the other contract recorded the transaction price is 269.1 million yuan. After the tax inspection by the Inspection Bureau of the Taxation Bureau, it is proposed to impose a total of 139 million tax administrative penalties on the eight people for the additional payment of stamp duty, personal income tax and fines.
 
C. Analysis of the tax-related risks in China for high-income persons
 
1. Overview of domestic tax-related risks for high-income persons in 2019-2021
 
From 2019 to 2021, tax-related risk matters for high-income groups mainly involve equity transfer, partnership or sole proprietorship, local tax incentives and financial rebates, personal labor service distribution for executives, real estate transfer and auction, etc.
 
2. Non-declaration and false declaration of equity transfer
 
In the 2019-2021 tax-related dispute cases involving equity transfer, we found that the equity transfer of high-income groups mainly has the following non-compliance issues:
l Concealing the actual equity transfer income by constructing a "yin-yang contract";
l Reasonable evaluation is not carried out in combination with the fair value of the equity, and the equity transfer income is reduced by transferring the equity at a par or at a low price;
l Failure to declare in time after the equity transfer, or even not to declare the income from the equity transfer.
 
In response to the above problems, the tax authorities have further strengthened cooperation with other departments, including: actively cooperating with industrial and commercial administration departments; strengthening ties with securities institutions, and proactively grasping the shareholder composition of listed companies and companies to be listed in the region; individual regions have set up a special equity transfer section in promoting the construction of "smart taxation".
 
3. Partnership, individual industrial and commercial households, and sole proprietorship have tightened the applicable caliber of assessed tax method
 
For high-income people, setting up partnerships, individual industrial and commercial households, and sole proprietorship in low-tax areas can achieve the purpose of reducing personal income tax by enjoying the benefits of assessed tax method. However, in fact, this method changed the nature of income, but the actual operations stay the same. In this regard, the tax authorities have gradually standardized and tightened approval standards when individuals applying for assessed tax method:
 
l Article 2 of Guoshuifa (2010) No. 54 stipulates that tax agents, accountants, lawyers, asset appraisal and real estate appraisal intermediaries such as appraisal intermediaries shall not use assessed tax method of individual income tax;
l The General Office of the State Administration of Taxation issued a notice proposing that individual studios and enterprises established by celebrity artists and network anchors should be guided to establish an accounting system in accordance with laws and regulations, and use the method of audit collection method to declare and pay taxes;
l If the funds of sole proprietorship enterprises, partnership enterprises and individual industrial and commercial households are used for the consumption expenditure and property expenditure of the investor himself, family members and related personnel, the individual income tax shall be calculated and collected in strict accordance with the relevant regulations;
l Strengthen the management of cancellation of sole proprietorship, partnerships and individual industrial and commercial households. Before their cancellation, the competent tax authorities should take the initiative to take effective measures to deal with relevant tax matters;
l Announcement No. 41 requires that sole proprietorship and partnerships (hereinafter referred to as "sole proprietorship and partnerships") that hold equity investments such as equity, stocks, property shares of partnership enterprises, etc., shall apply the method of audit collection method to calculate and levy individual income tax.
 
As of November 20, 2021, among the 197 people involved in the tax evasion cases using the assessed tax method, except for 3 people who were seriously ill and 37 people who lost contact, the remaining 157 people had remitted tax payments of 840 million yuan. At the same time, in accordance with the work arrangement of "first pilot, then expanding, and then rolling out", the State Administration of Taxation has standardized the assessed tax method of personal income tax. The full plan will be rolled out to the whole country soon.
 
4. There is a policy risk of being rectified for local tax incentives and fiscal rebates
 
In response to the abuse of tax incentives in some places to attract celebrities and internet celebrities, the State Administration of Taxation proposed that the management of tax-related incentives in the cultural and entertainment fields should be effectively regulated, and tax authorities at all levels shall not implement tax incentives that are set up in violation of regulations or implemented in an alternative way. Carry out inspections on whether star artists and network anchors should enjoy tax incentives, etc.
 
In addition, the "Rectification Situation" released on December 21, 2021 pointed out that the 2020 audit found 23 illegal tax refund problems in 15 provinces, involving an amount of 23.9 billion yuan. According to feedback from various places, as of November 15, 22 rectifications have been completed, involving an amount of 23.3 billion yuan; 1 is being rectified, involving an amount of 600 million yuan, and the rectification is expected to be completed by the end of December 2021.
 
At the same time, the "Rectification Situation" clarifies that the Ministry of Finance and the State Administration of Taxation jointly set up a special working class to establish a collaborative working mechanism, focusing on rectifying issues such as rectification of illegal returns of tax revenue, and organize a nationwide special campaign to rectify the problem of false fiscal revenue.
 
In this regard, we expect that in 2022, the tax authorities will increase the rectification of local tax incentives and fiscal rebate policies, and some local governments have the risk of not being able to fulfill their previous administrative commitments such as tax incentives and fiscal rebates.
 
5. Non-compliant distributions of executive income
 
According to the "Individual Income Tax Law", the applicable personal income tax rate range for personal wages, salaries and labor income is "3%-45%". For high-income people (especially corporate executives), the highest 45% of wages and salaries are applicable, which has led to the situation that high-income people or companies conduct "tax planning" for executives, and then evade tax .
 
In practice, high-income earners or enterprises have more tax evasion tactics for high-income, such as:
l Use "yin-yang contracts" to disguise the real transaction amount and hide part of the income to avoid paying taxes;
l Companies will sign fictitious contracts with service companies and send the compensations for executives to the service company. Then, the service company will cash out the received amount (minus fees) to the executives for them to avoid paying income tax.
l Celebrities will change the nature of income from remuneration to operating income, which in turn will enjoy a lower tax rate.
l Falsely issuing invoices to write off income from company’s book, and cash out money to avoid paying income tax.
 
6. Real estate judicial auction tax liability disputes
 
Online judicial auctions also have tax risks, and the most prominent is the tax burden in real estate auctions. Judicial auction transfer announcements or transfer contracts usually include a clause that "all taxes and fees incurred during the transfer or transfer process shall be borne by the buyer". When the buyer bids on the real estate, he often lacks a clear understanding and estimation of the way and amount of taxes and fees, so that he feels that the taxes and fees that should be paid by the seller are too heavy when handling the transfer. Through administrative litigation and other means, the taxpayer wants to reduce the economic burden on its own side, but the court often does not support such claims.
 
In addition, the taxes and fees borne by the buyer on behalf of the seller cannot be deducted before tax. Since the buyer's agreement to bear the seller's taxes and fees does not change the legal taxpayer, the taxpayer on the tax payment certificate for the seller's tax payment is still the seller, and the pre-tax deduction must have a legal and compliant certificate, the name of the taxpayer A tax payment certificate for the seller obviously cannot be used as a deduction certificate for the buyer. It is obviously unreasonable for the buyer to bear the tax, but it cannot be deducted before income tax.
 
In this regard, we have sorted out the main disputes involved in the judicial auction of real estate:
 
(1) Whether the "Auction Rules" and "Auction Transaction Confirmation" are part of the contract. The auction confirmation letter refers to the auction activity, after the bidder puts forward the highest bid, the auctioneer hits the hammer to confirm, and the auction is completed at this time, and the transaction should be confirmed in writing. Although there are certain disputes in practice whether the "Auction Rules" and other similar documents are part of the "Auction Transaction Confirmation", the opinions in judicial practice are biased to a certain extent.
(2) Whether the tax pass-through clause violates the mandatory provisions of the law.
(3) Generally the "Auction Rules" or "Auction Transaction Confirmation" will state that "all taxes, fees, gold, etc. generated during the transfer of ownership shall be paid by the buyer", "all taxes, fees, and gold generated during the transfer of ownership shall be paid by the There are certain disputes in practice as to how to explain the "fees". The transferee generally believes that "transfer" is not equivalent to "transaction", and it only needs to bear the burden of taxes and fees generated during the transfer, and does not need to bear additional tax burdens.
(4) Whether the land value added tax is a tax arising from a specific link of the transaction.
(5) A total of two online auctions can be conducted. After the second auction fails, the enforcement court will ask the executor or other enforcement creditors whether to accept the payment of the debt with property. If not, the people's court may sell it on the same online judicial platform according to law. During the execution procedure, if the execution target fails to be auctioned twice, the execution applicant may choose to “repay the debt with property” to repay the debt. When the execution target is real estate, unless there is a special agreement between the creditor and the person subject to execution, the tax at the time of handling the transfer. Fees and related handling fees shall be borne by both parties in accordance with the legal provisions on the payment of taxes and fees for transfer of real estate by way of transfer. However, in judicial practice, different courts and judges have inconsistent views on the determination of the specific method of paying taxes and fees, and some courts do not even determine the method of paying taxes and fees at all in judicial decisions.
(6) Some local tax authorities believe that the relevant taxes and fees borne by the bidder on behalf of the person subject to execution should have been borne by the person subject to execution. This part of the taxes and fees are not "reasonable" and "related to the income obtained", so they cannot be deducted before corporate income tax. Furthermore, the tax liability clause in the auction announcement does not change the taxpayer, even if the bidder bears the relevant taxes that should have been borne by the person subject to execution. The taxpayer on the tax payment letter or other tax payment certificate issued by the tax authority is still the person subject to execution. Based on the above two factors, after the bidder bears the relevant taxes, there may be a risk that the payment cannot be made before the corporate income tax.
 
D. Analysis of the main overseas tax-related risks of high-income groups
 
1. Offshore company and account income deferred tax risk
 
If an individual sets up a shell offshore company overseas and the company has no business substance, the "controlled foreign enterprise" rule will undoubtedly have a huge impact on this type of structure. However, before the promulgation of the relevant rules, because there is no complete mechanism for anti-tax avoidance investigation and tax adjustment under the Individual Income Tax Law, it is difficult for us to judge whether the anti-tax avoidance rules are applicable under the Individual Income Tax Law, especially the "controlled foreign enterprises".
 
2. Overseas trust tax planning risks
 
If the overseas trust structure is properly planned, the overseas holding company under the trust will not necessarily be recognized as a "controlled foreign enterprise" under the Individual Income Tax Law, so that the profits retained in the offshore company can be deferred and are deemed to be distributed current tax liability.
 
However, it should be reminded whether there will be tax costs in the transfer stage during the process of setting up an overseas trust and placing assets into the trust (for example, property transfer). If the property to be placed in the trust is value-added property, such as the equity of an overseas company, there is no clear taxation basis for whether the act will be regarded as a transfer of the property by the founder at fair value.
 
3. Anti-tax avoidance risk of overseas information and data exchange
 
The Common Reporting Standard (CRS) is the automatic exchange of tax-related information in financial accounts. Since the OECD issued the "Standard for the Automatic Exchange of Tax-related Information in Financial Accounts", it has received extensive responses from various countries and regions. There are currently 100 countries (regions) expressed their participation, and China was one of them.
 
Although there has been no case of anti-tax avoidance of individuals through CRS information exchange in China so far, when a high-net-worth individual has opened a bank account overseas and receives an overseas bank inquiring about the individual's tax residency status, we recommend that the high-net-worth individual open a bank account overseas. Declare your tax residency status truthfully to avoid adverse legal consequences of misrepresentation. In particular, if a high-net-worth individual constitutes a double tax resident because of their status abroad or long-term work abroad, they need to be more cautious.
 
E. 2022 tax compliance advice for high-income earners
 
1. Control tax risks through regular tax health inspections, self-examinations, etc. 
 
As mentioned above, many high-income people take advantage of the characteristics of complex income types, diverse sources, and wide regions to evade and avoid taxes. Common methods mainly include:
l Concealing income, not reporting income, or making false declarations;
l Individuals make consumption expenditures from corporate enterprises and borrow money from investment enterprises;
l Sign a "yin-yang contract" to artificially adjust the transaction price and conceal the real income;
l Overseas tax avoidance, such as transferring assets to low-tax countries through immigration, offshore trusts, and registering companies in tax havens.
 
2. Compliance and timely tax filing
 
We recommend that high-income individuals need to comprehensively check and verify the various types of income they have obtained in one year during the reporting period of the following year, and report truthfully. It should be noted that if there is overseas income, since there is no withholding agent for the income, the taxpayer needs to complete the declaration of overseas income during the declaration period.
 
3. Standardized personal tax credit management
 
After the Personal Income Tax Law revised in 2018 stipulates that the comprehensive settlement and payment of personal income tax will be carried out, personal credit has gradually entered the monitoring and management of tax authorities. We suggest that you should focus on the following when dealing with related matters, so as to accumulate your own tax credit in a little bit:
l Pay attention to credit commitments in advance
l Pay attention to honesty and trustworthiness
l Follow legitimate interests after the fact
l High-income earners should pay more attention
 
4. Properly respond to tax audits and anti-tax avoidance investigations
 
In the face of tax authority audits or anti-tax avoidance investigations, in addition to maintaining one’s own procedural rights in accordance with procedural regulations such as administrative reconsideration, it can also be considered from multiple perspectives to safeguard core substantive rights:
l The purpose and substance of the income or asset investment transaction. such as whether the transaction has a legitimate business purpose or is it merely for the purpose of evading or delaying the payment of tax.
l Calculation of late fee. If a taxpayer is obliged to pay back taxes or is subject to tax adjustments as a result of tax planning, is there a late payment fee? How are the start and end dates for late payment fees determined?
l Confirmation of administrative penalties. If a taxpayer is obliged to pay back taxes or is subject to tax adjustments as a result of its tax planning, should it be subject to administrative penalties? Can you get a more favorable fine range?
 
In view of the complexity and professionalism of the above tax disputes, we recommend hiring a professional tax lawyer to provide legal services.
 
5. Professional tax-related criminal risk response
 
Based on the current legal provisions and judicial practice, we have summarized five aspects that need to be paid attention to in the specific application of the crime of tax evasion:
(1) In tax evasion cases, administrative punishment is the pre-procedure;
(2) Tax evasion must conform to the crime of tax evasion;
(3) After the tax authority has issued a notice of recovery according to law, the perpetrator should pay the tax payable and pay the late payment fine, and if he has already received an administrative penalty, he will not be investigated for criminal responsibility, but after the public security organ has filed the case, he will pay the tax payable, pay the late payment fine, or Accepting administrative punishment does not affect the investigation of criminal responsibility;
(4) Only when the perpetrator exceeds the time limit prescribed by the tax authority and does not accept processing or punishment, the judicial authority can investigate the criminal responsibility;
(5) If the perpetrator has received criminal punishment for evading tax payment within five years or has been given two or more administrative punishments by the tax authority, the reason for tax evasion in Article 201 of the Criminal Law shall no longer apply.
 
 
Of course, after a taxpayer accepts an administrative penalty, it does not mean that the right to apply for administrative reconsideration and the right to file an administrative lawsuit is lost. We suggest that if it is only a first-time offender, when receiving a notice of collection from the tax authority, you must first take active measures to make up the tax and pay late fees to avoid being investigated for criminal responsibility. After that, consider safeguarding their legitimate rights and interests through legal means such as administrative reconsideration or administrative litigation in light of their own circumstances.
 
If a case enters criminal proceedings, a defense may be considered from the following aspects:
l Tax evasion has not been carried out. If the perpetrator commits forgery, alteration, concealment, unauthorized destruction of account books, accounting vouchers, etc., but does not evade tax, the crime of tax evasion shall not be established.
l There is no subjective intention. If the taxpayer or individual neglects to pay or underpays tax due to negligence, such as careless work, misuse of tax rate, omission of taxable items, etc., it should not be directly determined as subjective intention.
l Failure to meet the filing and prosecution standards. The crime of tax evasion is a consequential crime, and it must reach one of the following statutory results to be established: 1) The amount of tax evasion is relatively large and accounts for more than 10% of the tax payable. Pay late payment fines or do not accept administrative penalties; 2) Have been subject to criminal penalties for tax evasion or given more than 2 administrative penalties by tax authorities within 5 years, and evaded tax payment, with an amount of more than 50,000 yuan and accounting for more than 10% of various taxable taxes 3) The withholding agent resorts to deception and concealment, and fails to pay or underpay the tax withheld or collected, and the amount is more than 50,000 yuan. If the perpetrator does not meet any of the above three items, it does not constitute tax evasion.
l Take the initiative to confess and pay taxes and overdue fines. If the crime is minor, the penalty may be waived and no prosecution will be filed.