From July 1, the State Administration of Taxation (SAT) has been focusing on special rectification of falsely issuing invoices and tax fraud across the nation and rigorously cracking down on illegal acts including falsely issuing special VAT invoice, cheating on labor export and service industry export tax rebate in pilot sectors of “Switching from Business Tax to VAT” (Switching Pilot) to ensure smooth rollout of tax system reform with focus on Switching Pilot.

It is reported that the special rectification mainly focuses on illegal acts related to tax, such as falsely issuing special VAT invoice and cheating on export tax rebate by “Switching from Business Tax to VAT” enterprises, and that transportation (especially inland and inland water transportation) and freight forwarding enterprises are targeted. The special rectification is conducted by emphasizing the authenticity of taxable service offered by enterprises, integrity, accuracy and timeliness of revenue confirmation, and compliance of deduction of input VAT as well as deduction of taxable difference from sales.

Switching Pilot was launched first in Shanghai on January 1 last year, followed by Beijing, Jiangsu, Anhui and other 5 provinces (cities) in turn. From August 1, pilots will be rolled out across the country. The reporter has learned that illegal enterprises that falsely issue special VAT invoices are emerging in the pilot industries, especially in transportation industry in which there is high momentum of frequently falsely issuing invoices and accepting invoices that are falsely issued. Recently, the tax inspection authorities have investigated some severe cases of falsely issuing special VAT invoices.

Relevant leader of the Inspection Bureau of the SAT pointed out that the Switching Pilot covers a wide range of sectors, therefore, it is a key task for local taxation organs to ensure the smooth implementation of the Switching Pilot this year. Inspection authorities shall investigate cases involving falsely issuing special VAT invoices in pilot sectors with target and attack unlawful act, which is an important means of ensuring that Switching Pilot progresses smoothly.

The SAT issued a notice thereof to require taxation organs in all regions to ensure actual effects during the special rectification, resolutely crack down on and punish shell companies that are established to issue false special VAT invoices or have heavily disturbed the taxation order and transfer them to the public security organs in accordance with laws, collect tax from and impose a fine on enterprises that have authentic transactions but pay less tax due to issuing or accepting invoices improperly and put more efforts on publicity of tax laws and policy guidance to enhance compliance with tax laws of enterprises.