Finance is the foundation and an important pillar of national governance. Taxation is the primary source of fiscal revenue and also a crucial tool for the state to achieve macroeconomic regulation and control. General Secretary Xi Jinping profoundly pointed out: “A sound fiscal and tax system is the institutional guarantee for optimizing resource allocation, safeguarding market unity, promoting social equity, and ensuring the long-term stability and prosperity of the nation.” Crimes that undermine tax collection and administration harm the state’s tax interests, jeopardize fiscal stability, disrupt the order of economic development, erode social fairness and justice, and pose a grave threat.

China’s tax supervision is shifting from “tax management based on invoices” to “tax governance based on data,” moving toward more precise, categorized supervision. The crackdown on tax-related illegal and criminal activities is continuously intensifying. At the same time, crimes that undermine tax collection and administration are undergoing new changes: criminal methods are constantly being innovated, and the means of committing these crimes are becoming increasingly covert—such as using “yin-yang contracts” to evade taxes or secretly transferring assets to avoid collecting outstanding tax debts. These crimes are exhibiting clear characteristics of professionalization and specialization, with rising levels of informationization and ever-greater intelligence, making it increasingly difficult to detect, investigate, and accurately characterize many such cases. Some industry platforms have misinterpreted the state’s policies encouraging innovation and development, turning themselves into “ticket-selling” platforms that facilitate criminal activities. Such platforms not only disrupt the order of invoice management and harm national tax revenues but also seriously undermine the fair development environment of the platform economy. Punishing these “ticket-selling” platforms according to law will not only help maintain tax order but also contribute to purifying the development environment of the platform economy.

Punishing, in accordance with the law, all types of crimes that undermine tax collection and administration, safeguarding the order of the socialist market economy, and providing high-quality judicial services to support high-quality development have always been the responsibilities of the people’s courts. In recent years, the people’s courts have fully leveraged their functional roles, legally adjudicated a number of criminal cases involving tax evasion, avoidance of tax collection, fraudulent claims for export tax rebates, and the issuance of false special value-added tax invoices—crimes that seriously jeopardize tax collection and administration—and thereby effectively protected national tax security. To further demonstrate the people’s courts’ firm determination to punish tax-related crimes according to law, safeguard national tax security and market economic order, guide judicial rulings, enhance the effectiveness of punishment, promote lawful tax compliance, and raise tax compliance levels, we have selected and released eight cases of typical significance.

Going forward, the People's Courts will take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as their guiding principle, deeply study and grasp the core essence, rich implications, and practical requirements of Xi Jinping’s Rule-of-Law Thought and Xi Jinping’s Economic Thought. They will continue to intensify efforts to crack down on crimes that undermine tax collection and administration, standardize judicial rulings, enhance the quality and efficiency of case handling, safeguard the order of tax collection and administration, and foster a fair and rule-of-law-based environment.

Case 1: The Tax Evasion Case Involving Guo and Liu

— If tax evasion is offset by using falsely issued special value-added tax invoices, it shall be handled in accordance with the law based on the principle of consistency between subjective and objective elements.

Basic Facts of the Case

In February 2018, the defendants Guo and Liu registered and established Suo Metal Products Co., Ltd. (hereinafter referred to as “Suo Company”) in Xiqing District, Tianjin. Guo was the actual controller of the company, while Liu served as its legal representative. Between February and December 2018, Guo and Liu obtained a total of 880 special value-added tax invoices from several companies—including Sichuan Luzhou Trading Co., Ltd. and Shanghai Certain Industrial Co., Ltd.—without any genuine transactions taking place. These special VAT invoices had a total price and tax amount of 160 million yuan, with a tax amount exceeding 23 million yuan. Investigation revealed that in 2018, Suo Company declared an outbound tax amount of over 52 million yuan and an input VAT credit amount of over 50.25 million yuan. In September 2022, Guo and Liu were each apprehended and brought to justice. During the first-instance trial, Liu’s family members repaid 200,000 yuan on his behalf.

Referee's decision

The People's Court of Xiqing District, Tianjin Municipality, held that the defendants Guo and Liu violated state regulations on tax administration by having other companies issue false special value-added tax invoices for So Company—operated by the two defendants—without any genuine transactions, thereby enabling them to offset taxes. The amount involved was substantial, and their actions thus constituted the crime of issuing false special value-added tax invoices. Defendant Guo was sentenced to 13 years and 6 months of imprisonment and fined RMB 400,000; defendant Liu was sentenced to 4 years and 6 months of imprisonment and fined RMB 150,000. After the judgment was pronounced, defendant Guo filed an appeal. Upon review, the No. 1 Intermediate People's Court of Tianjin Municipality held that the key distinction between the crime of issuing false special value-added tax invoices and the crime of tax evasion lies in whether the perpetrator’s subjective intent was to fraudulently obtain state tax revenue or to evade tax obligations. If a taxpayer, within the scope of their tax liability, commits a crime by falsely increasing input tax credits to reduce or avoid paying taxes—even if they employ means such as issuing false invoices for deduction—their subjective intent remains to avoid or underpay taxes. In accordance with the principle of unity of subjectivity and objectivity, such conduct should be prosecuted as tax evasion. Guo and Liu engaged in fraudulent tax declarations through deceptive means, resulting in a massive tax evasion amount accounting for more than 30 percent of their due tax liability, thus constituting the crime of tax evasion. Accordingly, defendant Guo was re-sentenced to 6 years of imprisonment and fined RMB 400,000 for the crime of tax evasion; defendant Liu, being an accomplice, was sentenced to 2 years of imprisonment and fined RMB 150,000 for the same crime.

Typical significance

Currently, tax evasion cases involving the acceptance of falsely issued special value-added tax invoices are on the rise. In terms of legal characterization, we should adhere to the principle of unity between subjective and objective elements and ensure that the punishment fits the crime, striving to achieve the optimal integration of the “three effects.” Tax evasion refers to an act by which a perpetrator deliberately avoids fulfilling their tax obligations, resulting in financial losses to the state in terms of taxes owed. By contrast, tax fraud involves an act committed with the intent of illegally appropriating taxes already collected by the state. Consequently, there is a significant difference between the subjective malice of the perpetrators and the objective harmfulness of their actions in these two crimes. Therefore, judicial authorities must ascertain the facts in accordance with the law and treat these offenses differently. Based on the principle of unity between subjective and objective elements, we should clearly distinguish between tax evasion and tax fraud. Furthermore, given the principle of proportionality between crime and punishment, tax fraud poses a greater threat and reflects deeper subjective malice on the part of the perpetrator; thus, it should be strictly punished according to the law. From the perspective of the “three effects,” treating the aforementioned conduct committed by enterprises with tax payment obligations as tax evasion under the law not only accurately reflects the essential nature of the behavior but also complies with the fundamental principles of proportionality between crime and punishment and relevant legal provisions. This approach helps prevent overly harsh penalties for minor offenses against genuine businesses and contributes to the healthy development of the nation’s tax base.

Case 2: The Tax Evasion Case Involving Xinjiang Bai Mou Real Estate Development Co., Ltd. and Mao Moumou

— Punishing, in accordance with the law, tax evasion activities involving “yin-yang contracts”

Basic Facts of the Case

On March 9, 2012, the defendant Mao Moumou and Zhou Moumou (deceased) jointly affiliated themselves with Kuitun Bai Mou Real Estate Development Co., Ltd. (hereinafter referred to as Kuitun Bai Mou Company) and established the Shawan County Branch of Kuitun Bai Mou Company. On March 12, 2012, the branch legally obtained a tax registration certificate and commenced real estate development activities for the “Lin Mou Yuan” project in Shawan County. On February 20, 2013, due to policy adjustments, the branch was unable to proceed with the project’s approval process. Consequently, Kuitun Bai Mou Company relocated to Shawan County and changed its name to Xinjiang Bai Mou Real Estate Development Co., Ltd. (hereinafter referred to as Xinjiang Bai Mou Company). The Shawan County Branch of Kuitun Bai Mou Company was deregistered on June 27, 2013, and its tax registration was canceled on December 23, 2013. Subsequently, all business activities related to the “Lin Mou Yuan” real estate development project—including project approval, land acquisition, engineering planning, construction permits, construction work, pre-sale permits for commercial housing, signing of sales contracts, and issuing invoices for sold properties—were conducted under the name of the defendant company, Xinjiang Bai Mou Company. From 2012 to 2018, Mao Moumou and Zhou Moumou continued to engage in the “Lin Mou Yuan” real estate development project in Shawan County and carried out external sales by affiliating themselves with and using the real estate development qualifications of the defendant company, Xinjiang Bai Mou Company. During this period, they employed various means to evade taxes: depositing part of the housing payments into Zhou Moumou’s personal bank account to conceal income; signing commercial housing sales contracts with amounts differing from the actual receipts and failing to declare taxes based on the actual amounts received; and knowingly treating demolished compensation houses as sales yet failing to declare them when no invoices were issued. As a result, they failed to pay or underpaid business tax, value-added tax, urban maintenance and construction tax, and enterprise income tax totaling over 3.86 million yuan, representing 30.49% of the total tax liability. On November 30, 2020, the Inspection Bureau of the Tax Bureau of the Tacheng Region of Xinjiang delivered to Xinjiang Bai Mou Company a Notice of Tax Administrative Penalty and a Notice of Tax Handling, ordering it to pay the outstanding taxes within a specified time limit. However, the company failed to make up the tax payment within the prescribed deadline.

Referee's decision

After trial, the People's Court of Shawan City, Xinjiang Uygur Autonomous Region, held that the defendant company, Xinjiang Bai Mou Co., Ltd., had evaded a substantial amount of tax—exceeding 30 percent of its total tax liability—and, despite being notified by the tax authorities, failed to make up the unpaid taxes as required. The defendant, Mao Moumou, as the specific person in charge of the project, actively participated in the aforementioned tax evasion activities. Both the defendant company, Xinjiang Bai Mou Co., Ltd., and the defendant, Mao Moumou, were found guilty of tax evasion. The defendant company, Xinjiang Bai Mou Co., Ltd., was fined RMB 500,000, and the defendant, Mao Moumou, was sentenced to three years' imprisonment and fined RMB 50,000. After the judgment was pronounced, the defendant, Mao Moumou, filed an appeal, admitting guilt and accepting the punishment, and requested a lighter sentence. Following review, the Intermediate People's Court of the Tacheng Region, Ili Kazakh Autonomous Prefecture, Xinjiang Uygur Autonomous Region, ruled to dismiss the appeal and uphold the original judgment.

Typical significance

Taxation is the primary source of national fiscal revenue, and paying taxes in accordance with the law is a fundamental duty of citizens as stipulated by the Constitution. Tax evasion not only directly harms national tax revenues and disrupts the country’s economic order, but also undermines social integrity, erodes societal values, and constitutes one of the key types of tax-related crimes that warrant stringent crackdown. According to criminal law, the methods of tax evasion include making false tax returns or failing to file returns through deception or concealment. In practice, the specific methods of tax evasion are highly varied and diverse. Compared with other methods, signing “yin-yang contracts” to evade taxes often exhibits greater concealment and is more difficult to detect and investigate. The “Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases Endangering Tax Collection and Administration,” issued jointly by the Supreme People’s Court and the Supreme People’s Procuratorate, explicitly defines the act of concealing income and assets by signing “yin-yang contracts” as a method of tax evasion. The harmfulness of tax evasion committed through “yin-yang contracts” does not lie solely in the act of signing such contracts itself; rather, it stems from the underlying motives behind these contracts and the objective consequences—namely, the substantial loss of tax revenue they cause. At present, “yin-yang contracts” are not uncommon in social life. Pursuing criminal liability under the law for those who use “yin-yang contracts” to evade taxes serves as a strong warning against such behavior, sending a clear signal to society to comply with tax laws and conduct business with integrity, thereby promoting general preventive measures against similar acts.

Case 3: The case of Liang Moumou evading the recovery of unpaid taxes

— Punish, in accordance with the law, criminal acts of maliciously evading tax payments.

Basic Facts of the Case

The defendant, Liang Moumou, established an individual business—Renshou Wei Mou Building Materials Processing Factory (hereinafter referred to as Wei Mou Building Materials Factory)—in Renshou County, Sichuan Province, in January 2019. The factory engaged in the procurement, processing, and sale of sand and gravel, and ceased operations at the end of 2021. During this period, it failed to pay taxes as required. In October 2021, the Second Inspection Bureau of the Tax Bureau of Meishan City, Sichuan Province, conducted an inspection of Wei Mou Building Materials Factory’s tax-related issues during its operating period and discovered that the factory owed a total of over 4.06 million yuan in unpaid taxes. On February 22, 2022, the Second Inspection Bureau of the Meishan City Tax Bureau served Wei Mou Building Materials Factory with a “Tax Treatment Decision,” requiring it to pay the aforementioned taxes within 15 days. Liang Moumou failed to make the payment by the deadline. On March 14, 2022, the Second Inspection Bureau of the Meishan City Tax Bureau again served the factory with a “Notice of Tax Matters,” ordering it to pay the outstanding taxes by March 18. To evade tax collection efforts by the tax authorities, between March and November 2022, Liang Moumou secretly transferred funds earned by Wei Mou Building Materials Factory to his son, Liang Mou. Specifically, he made eight transfers totaling over 3.72 million yuan through the company’s public account, 28 transfers totaling over 2.82 million yuan through his personal account at the Agricultural Bank of China, and 30 transfers totaling 1.5 million yuan through his personal account at the Jingyan County Rural Credit Cooperative Union. As a result of Liang Moumou’s actions, the Meishan City Tax Bureau was unable to collect the taxes owed by him during the period when he operated Wei Mou Building Materials Factory. On October 9, 2023, Liang Moumou turned himself in and subsequently paid an additional 2.46 million yuan in taxes, reaching an agreement with the tax authorities to settle his outstanding tax liabilities.

Referee's decision

After trial, the People's Court of Renshou County, Sichuan Province, held that the defendant, Liang Moumou, had failed to pay the taxes owed. After the tax authorities issued a notice requiring him to make up the unpaid taxes, he concealed his assets by transferring funds from his account to the accounts of others, thereby preventing the tax authorities from collecting the outstanding tax debt of over 4.06 million yuan. His actions thus constituted the crime of evading the collection of unpaid taxes. Given that Liang Moumou turned himself in and voluntarily pleaded guilty and accepted punishment, he was given a lighter sentence in accordance with the law and sentenced to probation. Accordingly, Liang Moumou was convicted of the crime of evading the collection of unpaid taxes and sentenced to three years' imprisonment, with a four-year suspended sentence, and fined 4.1 million yuan. Following the pronouncement of the judgment, no appeal or protest was filed within the statutory time limit. The judgment has now become legally effective.

Typical significance

Not only do acts such as tax evasion, tax fraud, and violent resistance to taxation directly harm the state’s tax revenue, but taxpayers who are capable of fulfilling their tax obligations yet deliberately transfer or conceal their assets—through means such as waiving due receivables, transferring property without compensation, engaging in transactions at conspicuously unreasonable prices, hiding assets, or escaping the supervision of tax authorities—also directly result in losses of state tax revenue and pose a serious threat. In practice, cases of tax arrears are not uncommon. If a taxpayer’s failure to pay taxes is due to objective reasons, the law allows for an extension of the payment deadline upon approval by the provincial tax authority. However, if a taxpayer is capable of fulfilling their tax obligations but maliciously transfers or conceals assets, rendering it difficult for the tax authorities to enforce collection through coercive measures, thereby leaving the outstanding taxes unpaid, this not only obstructs the tax authorities’ lawful performance of their duties but also directly causes losses to the state’s tax revenue. When the amount involved reaches or exceeds 10,000 yuan as stipulated by the Criminal Law, criminal liability shall be pursued according to law. Pursuing criminal responsibility for evading tax collection sends a clear signal to society that maliciously transferring assets to evade tax collection constitutes not merely tax arrears under tax law, but rather a criminal offense. This approach serves as a powerful deterrent, encouraging debtors to fulfill their tax obligations in accordance with the law.

Case 4: The fraud case involving Huang Moumou and others to obtain export tax rebates

—Strictly crack down on tax fraud involving the declaration of exported goods through circular import and export procedures to obtain export tax rebates.

Basic Facts of the Case

The defendant, Huang Moumou, was the legal representative of Shanghai Mei Mou Cashmere Textile Co., Ltd. (hereinafter referred to as Mei Mou Company) and was fully responsible for the company’s business management. The company primarily engaged in the procurement, processing, import, and export of cashmere products and textile raw materials. Between January 2009 and December 2012, Huang Moumou and others exported textile yarns either through Mei Mou Company’s own export operations or by entrusting foreign trade companies to act as agents for export. After the goods arrived in Hong Kong, they were re-declared for import under the guise of processing-in-progress or other similar pretenses, then transported back to Shanghai or Hebei via logistics companies. Once re-packaged, these goods were re-exported again under the name of Mei Mou Company. Huang Moumou and others transferred funds through personal accounts to private accounts held by underground money exchange operators, and then remitted these funds to multiple companies registered in Hong Kong under the names of various foreign entities. These Hong Kong-based companies subsequently made payments to Mei Mou Company in the capacity of foreign buyers, thereby completing fictitious payment and foreign exchange settlement transactions via a fund-recirculation scheme. After the payments were completed, Mei Mou Company and the relevant foreign trade companies processed refunds of export taxes. Investigation revealed that between January 2009 and December 2012, the defendant Huang Moumou and others fraudulently obtained a total of over 870 million RMB in state export tax refunds by employing the aforementioned cyclical export method.

Referee's decision

After trial, the No. 1 Intermediate People's Court of Shanghai held that the defendant, Huang Moumou, together with others, had fraudulently obtained state export tax rebates totaling over 870 million yuan by fabricating export trade transactions. His actions constituted the crime of fraudulently obtaining export tax rebates, and the amount involved was particularly huge. Therefore, the court sentenced the defendant Huang Moumou to life imprisonment, deprived him of his political rights for life, and ordered the confiscation of all his personal property. After the judgment was pronounced, the defendant Huang Moumou filed an appeal. Following a review, the Shanghai Higher People's Court dismissed the appeal and upheld the original sentence.

Typical significance

Export tax rebates are a tax incentive granted by the state to encourage domestic goods exports and enhance their international competitiveness. Under this policy, domestically produced goods can enter the international market at tax-free prices. Specifically, after goods are exported, the state refunds the taxes already paid during the goods’ production and circulation stages within the country, thereby avoiding double taxation. In practice, however, some unscrupulous individuals use the same goods as props to engage in circular import and export activities—so-called “false exports”—without actually increasing the country’s genuine export volume. Such practices run counter to the original intent of the state’s export tax rebate system and should not be entitled to the preferential treatment of export tax rebates. Using circular exports to fraudulently obtain export tax rebates not only disrupts the orderly conduct of the country’s export trade but also results in substantial losses of state tax revenue. Essentially, this constitutes tax fraud involving the illegal appropriation of state property, and those found guilty of such crimes must be severely punished according to law. The crime of fraudulently obtaining export tax rebates through illegal means, including circular exports, is the most serious and harmful type of offense against tax administration. It is a key target for crackdown by judicial authorities, and a high-pressure stance must be maintained against it.

Case 5: The case of Shen Moumou’s illegal sale of special value-added tax invoices

— Actions involving the resale of invoices for profit through platforms should be punished according to law.

Basic Facts of the Case

In January 2019, the defendant Shen Moumou registered and established Zhejiang Shen Mou Logistics Technology Co., Ltd. (hereinafter referred to as “Shen Mou Company”), whose business scope included road freight transportation (online freight forwarding), among other services. In late May, Shen Moumou instructed Wang Moumou, the head of the technology department, to add a function for retroactively entering waybills onto the online freight-matching system that had been developed earlier. Subsequently, using this retroactive waybill entry function, Shen Mou Company, through its sales staff and agents recruited by those staff members, sold special value-added tax invoices to logistics companies, construction engineering firms, and other enterprises lacking input tax invoices—so-called “invoice-receiving enterprises”—after collecting service fees totaling more than 5.3% of the price including tax. The specific procedure was as follows: Shen Mou Company entered forged freight information or business information already completed by social vehicles independently commissioned by the invoice-receiving enterprises into the online freight platform via the retroactive entry function. Then, by signing fictitious transportation contracts with the invoice-receiving enterprises and arranging for funds to flow back through various accounts, Shen Mou Company created the false impression that it had actually provided transportation services to these enterprises, thereby issuing special value-added tax invoices to them. According to investigations, from June 2019 to April 2021, Shen Mou Company used the above-mentioned methods to issue a total of 18,323 special value-added tax invoices to over 2,700 enterprises, with a total tax amount exceeding 827 million yuan, of which 823 million yuan had already been deducted.

Referee's decision

The Intermediate People’s Court of Lishui City, Zhejiang Province, held that the defendant, Shen Moumou, and others, without engaging in any genuine business activities, had issued false special value-added tax invoices for others on a massive scale, thus constituting the crime of issuing false special value-added tax invoices. Accordingly, the court sentenced the defendant Shen Moumou to fifteen years’ imprisonment and imposed a fine of RMB 400,000. After the judgment was pronounced, the defendant Shen Moumou filed an appeal. The Higher People’s Court of Zhejiang Province, in its final review, held that, according to relevant regulations, online freight transportation operations do not include merely providing information intermediation and transaction matching services for shippers and actual carriers. Online freight operators are required to conduct real-time monitoring and dynamic management throughout the entire process of transportation and transactions, and must not fabricate transaction, transportation, or settlement information. For transportation completed through online transactions, the platform may issue special value-added tax invoices for shippers, who can then legally offset their taxes using these invoices. However, in this case, the company actually controlled by the defendant Shen Moumou did not assume the responsibility of a carrier. Instead, Shen Moumou exploited the platform’s supplementary recording function to issue special value-added tax invoices—after collecting fees—from enterprises that had already completed offline transportation but lacked input invoices, as well as from enterprises that had not actually carried out any transportation business but still needed input invoices. By doing so, Shen Moumou, under the guise of operating online freight transportation, was in fact illegally selling special value-added tax invoices. Given the enormous quantity of such invoices illegally sold by Shen Moumou, his actions constituted the crime of illegally selling special value-added tax invoices. Consequently, the court sentenced him to ten years’ imprisonment and imposed a fine of RMB 250,000.

Typical significance

The platform economy is a new economic model characterized by internet platforms as its primary vehicle, data as a key production factor, next-generation information technology as its core driving force, and network information infrastructure as its vital support. The development of the platform economy is crucial for expanding domestic demand, stabilizing employment, and improving people’s livelihoods; it also plays a pivotal role in empowering the real economy and fostering new-quality productive forces. However, platforms are not lawless zones, and platform enterprises must conduct their business in strict compliance with the law. While the state vigorously promotes innovation in the platform economy, it also attaches great importance to its standardized development. The "Decision of the CPC Central Committee on Further Deepening Reform in All Respects and Promoting Chinese-style Modernization" explicitly states that we should “promote innovative development of the platform economy and improve the institutional framework for the regular supervision of the platform economy.” In the "Several Opinions on Promoting the Standardized, Healthy, and Sustainable Development of the Platform Economy," the National Development and Reform Commission and other relevant authorities further specify that we must strengthen tax supervision over platform enterprises and, in accordance with the law, crack down on tax-related illegal activities such as issuing false invoices and evading taxes. The defendant, Shen Moumou, took advantage of his company’s platform to collect service fees and issued special value-added tax invoices to entities—including companies with no actual transportation business—resulting in the deduction of national tax revenues. This transformed what was originally a legitimate transportation platform into a criminal platform engaged in the resale of invoices, disrupting the order of invoice management and jeopardizing national tax revenue. The handling of this case not only serves as a crackdown on illegal and criminal activities but also helps purify the environment of the platform economy. Relevant platform enterprises should draw lessons from this case, strengthen their internal supervision, refrain from testing the boundaries of the law, and certainly must not allow platforms—encouraged by the state for innovation and development—to be distorted into criminal “invoice-selling” platforms.

Case 6: The case of Chen Moumou’s fraudulent issuance of special value-added tax invoices

— Punish, in accordance with the law, the act of falsely issuing special value-added tax invoices with the intent to fraudulently obtain tax refunds.

Basic Facts of the Case

From March 2016 to April 2019, the defendant Chen Moumou, fully aware that Shanghai Mi Mou Industrial Co., Ltd. and eight other companies controlled by Luo Moumou and others (handled in a separate case, hereinafter referred to as “Shanghai Companies”) had no genuine goods transactions, and that Shanghai Companies also had no genuine goods transactions with sugar enterprises such as Guangxi Feng Mou Shenghua Co., Ltd. and Jiangsu Bai Mou Trading Co., Ltd. located in Guangxi and Jiangsu (hereinafter referred to as “Sugar Enterprises”), employed methods such as separating invoices from goods. Specifically, he arranged for accounting personnel of enterprises under his actual control to transfer funds via bank cards to Shanghai Companies, which then transferred the funds to the Sugar Enterprises. In return, the Sugar Enterprises issued special value-added tax invoices to Shanghai Companies, thereby enabling Shanghai Companies to obtain large amounts of input special value-added tax invoices. Further investigation revealed that Shanghai Companies used the aforementioned input special value-added tax invoices to offset output special value-added tax invoices falsely issued to other enterprises, thereby reaping illegal profits. Luo Moumou paid Chen Moumou a kickback at a rate of at least 1% of the total price and tax amount.

Referee's decision

The People's Court of Jurong City, Jiangsu Province, held that the defendant, Chen Moumou, had issued false special value-added tax invoices for others, involving a huge amount of tax. His conduct thus constituted the crime of issuing false special value-added tax invoices and should be punished accordingly under the law. Chen Moumou voluntarily surrendered himself, pleaded guilty and accepted punishment, and demonstrated restitution of illicit gains. Accordingly, the defendant Chen Moumou was sentenced to three years and six months of imprisonment and fined RMB 300,000. The illegally obtained proceeds already recovered in this case shall be confiscated and turned over to the state treasury; any remaining illegally obtained proceeds not yet recovered from the defendant Chen Moumou shall continue to be pursued and turned over to the state treasury. After the judgment was pronounced, the defendant Chen Moumou filed an appeal. The Intermediate People's Court of Zhenjiang City, Jiangsu Province, after lawful review, ruled to dismiss the appeal and uphold the original judgment.

Typical significance

A special value-added tax (VAT) invoice, compared with ordinary invoices, has the function of allowing taxpayers to offset their tax liabilities against the invoice itself. Malicious actors exploit this feature of special VAT invoices by fabricating contracts, separating invoices from actual goods, and conducting fictitious fund transfers—all without any genuine transactions—to issue false special VAT invoices for the purpose of tax deductions. Some use such practices to evade their tax obligations, while others seek to illegally appropriate state tax revenues. In addressing these issues, it is crucial to distinguish between the perpetrator’s subjective intent and the objective harmful consequences, and to accurately determine the nature of the act in accordance with the principle of unity of subjectivity and objectivity. Any act of falsely issuing and deducting taxes with the intent of illegally appropriating state property essentially constitutes a scheme to defraud the state of its assets through the fraudulent issuance of special VAT invoices; such acts must be severely punished according to law. Furthermore, anyone who knowingly provides assistance to another person in issuing false special VAT invoices with the intent of defrauding state property shall be prosecuted and punished for the crime of issuing false special VAT invoices in accordance with the law.

Case 7: The fraud case involving Luo et al. in obtaining export tax rebates

—Strictly punish, in accordance with the law, acts of fraudulently obtaining export tax rebates through “paying for and matching invoices.”

Basic Facts of the Case

From 2017 to 2022, the defendant Luo Moumou, without actually exporting any goods, arranged for Shen Moumou and others (being handled in a separate case) to purchase export customs declarations for goods that were not eligible for tax refunds. Luo then exchanged RMB for foreign exchange and transferred the funds into export agency platforms such as Nanchang Shengmou Industrial Co., Ltd. and Jiangxi Yimou Import & Export Co., Ltd., thereby disguising these transactions. Subsequently, using the names of companies under his actual control—such as Nanchang Xiaomou Clothing Co., Ltd. and Nanchang Linmou Clothing Co., Ltd.—Luo falsely issued special value-added tax invoices and prepared fake purchase and sales contracts, thereby fraudulently obtaining national export tax rebates. The investigation revealed that Luo and his accomplices had fraudulently obtained a total of over 140 million yuan in national export tax rebates through the above-mentioned methods; among this amount, more than 510,000 yuan had been declared for self-operated exports but had not yet been refunded.

Referee's decision

The Intermediate People’s Court of Nanchang City, Jiangxi Province, held that the defendant Luo Moumou and others had fraudulently obtained export tax rebates by falsely reporting exports, with the amount involved being exceptionally large. Their actions thus constituted the crime of fraudulently obtaining export tax rebates. Defendant Luo Moumou played a major role in the joint crime and was therefore identified as the principal offender. Luo Moumou voluntarily pleaded guilty and accepted punishment, and has returned the illegal proceeds totaling 1 million yuan; accordingly, Luo Moumou was given a lighter sentence. In light of the above, the defendant Luo Moumou was sentenced to fifteen years’ imprisonment and fined 200 million yuan, in accordance with the law. The 1 million yuan in illegal proceeds returned by Luo Moumou shall be confiscated and turned over to the state treasury according to law. The illegal proceeds, deposits, and any accrued interest seized and frozen by the public security authorities pursuant to law shall be handled by the public security authorities in accordance with the law; any shortfall will continue to be pursued and turned over to the state treasury. After the judgment was pronounced, no appeal or protest was filed within the statutory time limit, and the judgment has thus become legally effective.

Typical significance

With the development of China’s export trade and the continued implementation of the export tax rebate policy, criminal cases involving fraudulent claims for export tax rebates through “buying invoices and matching them with shipments” have become increasingly frequent. Some criminals collude with freight forwarding companies, underground money exchange networks, and upstream invoicing firms to form clandestine profit chains, engaging in illegal foreign exchange trading, issuing false or illegally selling or purchasing special value-added tax invoices, and committing other unlawful acts aimed at fraudulently obtaining export tax rebates. These activities severely disrupt the order of the market economy, infringe upon state property, jeopardize tax revenue security, and pose a grave threat to society. Judicial authorities have consistently adopted a zero-tolerance approach toward tax fraud crimes—imposing both lengthy prison sentences on offenders and hefty fines in accordance with the law—to crack down on such crimes, thereby effectively deterring profit-driven criminals and safeguarding national property security.

Case 8: The fraud case involving Nanjing Dongmou Platinum Co., Ltd., Yao Moumou, and others in obtaining export tax rebates

— The act of disguising silver as “sputtering target components,” falsely declaring the product name when exporting, and then applying for a tax refund constitutes the crime of fraudulently obtaining export tax rebates.

Basic Facts of the Case

In the first half of 2016, the defendant Nanjing Dongmou Platinum Co., Ltd. (hereinafter referred to as “Dongmou Company”), whose legal representative was the defendant Yao Moumou, reached an agreement with Hong Kong Xinmou Xing (Jin Hao) Co., Ltd. (hereinafter referred to as “Xinmou Xing Company”) under which Dongmou Company would sell silver to Xinmou Xing Company. Since silver is a commodity subject to export quota licensing in China and cannot be eligible for tax refunds upon export, and since silver products whose raw material costs exceed 80% cannot either qualify for tax refunds, Yao Moumou arranged for others to procure silver domestically. He then configured the silver according to a ratio of approximately 78.5% per batch, processed it simply with backing plates, and disguised it as “sputtering target assemblies.” By introducing additional transaction links and falsely reporting product names, he smuggled the silver out of China to Hong Kong, subsequently claiming export tax refunds under the guise of “sputtering target assemblies.” From June 2016 to May 2019, after processing the “sputtering target assemblies,” Dongmou Company first sold them to other companies actually controlled by Yao Moumou, and then resold them to Xinmou Xing Company. Upon receipt of the goods, Xinmou Xing Company disassembled the silver components from the “sputtering target assemblies” and melted down the silver. Payment was settled based on the value of the silver after deducting the refining costs required for re-melting. Meanwhile, the higher-value backing plates, such as rhenium plates, were re-imported through Jiangsu Liangmou Precious Metal Materials Technology Co., Ltd. and Huaian Yaomou Renewable Resources Co., Ltd., and then returned to Dongmou Company for repeated use. Investigation revealed that Dongmou Company and Yao Moumou, among others, used the above-mentioned methods to export a total of 60,937.7 kilograms of silver and obtained state export tax refunds totaling over 400 million yuan.

Referee's decision

The Nanjing Intermediate People's Court of Jiangsu Province held that the defendant company, Dong Mou, had employed deceptive means to fraudulently obtain substantial amounts of state export tax rebates, an act that constituted the crime of fraudulently obtaining export tax rebates. The defendant, Yao Moumou, as the directly responsible person in charge, should be held criminally liable for the crime of fraudulently obtaining export tax rebates, and the amount involved was particularly huge. Yao Moumou had colluded with others to jointly commit the crime of fraudulently obtaining export tax rebates under the premise of the company’s criminal conduct, thus constituting joint crime. In this joint crime, Yao Moumou was the principal offender. Since Dong Mou Company voluntarily pleaded guilty in court, a lighter punishment could be considered accordingly. Therefore, the court sentenced the defendant company, Dong Mou, to a fine of 400 million RMB for the crime of fraudulently obtaining export tax rebates; sentenced the defendant, Yao Moumou, to 14 years’ imprisonment and fined him 50 million RMB; and ordered the recovery and remittance to the state treasury of the over 400 million RMB in export tax rebates fraudulently obtained by Dong Mou Company. After the judgment was pronounced, both the defendant company, Dong Mou, and the defendant, Yao Moumou, filed appeals. Following a lawful review, the Jiangsu Provincial Higher People's Court ruled to dismiss the appeals and uphold the original judgment.

Typical significance

The state implements an export tax rebate system, but not all exported goods are eligible for such rebates. China’s exported goods are categorized into two types: those eligible for tax rebates and those prohibited from receiving them. Silver, as a precious metal, is classified as a restricted export commodity and is therefore not entitled to the export tax rebate policy. However, according to relevant regulations, for silver products whose raw material is silver, if the cost of silver accounts for less than 80% of the total product cost, exporters can apply for a tax rebate after export. If the cost of silver accounts for 80% or more of the total product cost, such products are not eligible for the state’s export tax rebate policy. In recent years, there has emerged a new type of crime in which unscrupulous individuals take products that do not qualify for the tax rebate policy, subject them to simple processing, and then disguise them as eligible for rebates. They falsely declare the product’s customs classification number, export the goods under this false pretense, and fraudulently claim export tax rebates, thereby defrauding the state of substantial export tax refunds. In response, the People’s Courts, guided by the principle of unity of subjective and objective elements and adhering to a criminal policy that combines leniency with strictness, have prosecuted and punished these offenders for the crime of fraudulently obtaining export tax rebates in accordance with the law, thus demonstrating their firm determination to safeguard national tax security and crack down rigorously on tax fraud crimes.