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Attention exporters! Don't take any more chances to ”avoid tax”!

A recent tax penalty case in Yichang has sounded the heaviest alarm for all exporters - theHe Yuan (Hubei) Nanotechnology Industry Co.The total amount of taxes and fines recovered in accordance with the law for exporting ”two high and one capital” goods to avoid taxes.23.806 million dollarsThe money involved has been fully recovered and deposited!

Many export enterprises have a misunderstanding: ”export tax rebates, ’two high and one capital” goods secretly underreporting points, hidden points of income, you can save a lot of money". But Yichang this enterprise's painful lesson to tell you:Avoiding tax is fun for a while, but being penalized ruins the whole thing.In particular, the ”two highs and one capital” exports should not be touched by the red line of regulation!

No beating around the bush today, pure dry goods to hit the pain point!

Read the case first: $23.8 million fine, what's wrong? (Dry dismantling)

This case is not accidental, but a typical case of precise investigation and handling by the tax authorities, the details of which hide the fatal mistakes that many export enterprises are prone to make, dismantled one by one:

Businesses involved:Heyuan (Hubei) Nanotechnology Industry Co., Ltd. (Yichang local enterprise)

Time involved:2021-2023 (3-year span, fluke kills)

The goods involved:Natural barium sulfate, precipitated barium sulfate (typical ”two highs and one capital” goods -- high energy consumption, high pollution, resourcefulness)

Tax avoidance operations (focus on this, don't step in these potholes):

- Shell export: 61 shell trading companies were found and exported under the names of these companies, with themselves as the real cargo owners, deliberately hiding their identities in an attempt to hide their identity;

- Hidden income: two sets of internal and external books are kept, with only a small amount of domestic and export income recorded in the external books for tax declaration purposes, and all sales income recorded in the internal books, of which a large amount of ”two highs and one capital” goods exported are not declared;

- False declarations: Obviously exporting far more than the declared amount (exporting more than 10 million dollars in 2022 alone, but only declaring about 200,000 dollars), and underpaying VAT, enterprise income tax, and other taxes by understating income and failing to declare according to regulations16.0860 million dollarsThe

Basis for penalties:According to Article 63 of the Law of the People's Republic of China on Administration of Tax Collection, taxpayers' concealment of income and false declarations are tax evasion, and the tax authorities shall, in accordance with the law, recover the tax, impose late payment fees, and impose a fine of not less than 5 times the underpayment of 50%, which will result in a final total of 23.806 million yuan of penalties.

Focused Reminder:Do not think that the ”shell export” ”two sets of accounts” hidden, now tax, public security, customs, foreign exchange management of multi-departmental information sharing, big data comparison a check, 61 shell companies, abnormal capital flow, freight records, all are evidence of conviction!

Need exclusive tax compliance program Immediately contact: 19076121147 (phone / WeChat the same number)

Export enterprises must see: 3 fatal pits, touch that is punished! (Pain Point Direct)

Many export enterprises have thin profits, always want to rely on ”tax avoidance” to save costs, but especially ”two high and one capital” goods exports, these three pits do not step on, step on one may lose a few years of profits, and even revocation of qualifications, criminal liability!

Pit 1: Mistakenly believe that the ”two high and one capital” goods can be exempted/refunded from tax, blindly avoiding tax

This is the most common misunderstanding! Many enterprises can not distinguish between the ”two high and one capital” goods export tax policy, thinking that the same as ordinary goods can be refunded, or think that ”high energy consumption” goods no one to control, intentionally under-declaration.

Clear policy red lines:China has long made it clear that the export of goods of ”two highs and one capital” is not subject to the VAT refund (exemption) and tax exemption policy, and that the sales revenue must be declared and the corresponding taxes must be paid in accordance with the regulations.

Common ”two high and one capital” export goods (remember to avoid stepping on it by mistake):

Natural barium sulfate, precipitated barium sulfate, silicon metal, magnesium ingots, granite, coal tar pitch, stainless steel plate, etc., the export of such goods, even if a penny of tax is not paid, as long as the income is hidden, false declaration, is tax evasion!

Pit 2: Shell export, commissioned illegal agents, trying to ”stealth” tax avoidance

Like the enterprises involved in the Yichang case, many enterprises feel that ”they do not directly declare customs, find an agent, shell company exports, will not be able to detect their own”, and even find unscrupulous intermediaries, ”free agent” as a gimmick, selling export information, shell customs declaration.

Risk Warning:Shell export, illegal agent, the essence is tax evasion! Intermediary run away, shell company lost contact, the final responsibility is still the real owner of the goods; and now the freight forwarding company, customs brokerage company's information will be regulated, abnormal freight costs, capital flow, will become a clue to investigate and deal with.

Pit 3: Refusing to declare and pay back after receiving a tax notice

Some enterprises, after being found suspicious by the tax authorities, notified to make up the declaration and pay back the tax, take a lucky break and refuse to fulfill their tax obligations, thinking that ”the tax authorities cannot find out the real truth”.

Serious consequences:This behavior belongs to the ”malicious tax evasion”, not only will be aggravated by the fine, but also may be transferred to the public security organs, criminal responsibility (according to the ”Criminal Law of the People's Republic of China” Article 210, suspected of tax evasion). In Fuzhou, there is an enterprise, because of the refusal to declare "two high and one capital" export tax, has been transferred to the public security investigation.

Need exclusive tax compliance program Immediately contact: 19076121147 (phone / WeChat the same number)

Dry guide: export ”two high and one capital” goods, how to avoid the pit? (Must be stored)

Instead of taking a chance to avoid taxes, it is better to understand the policy and standardize the operation, which is the fundamental of the long-term survival of the export enterprises, 4 compliance points, remember and implement!

1. Clarity first:Do you export your own goods, whether they belong to the ”two high and one capital”? If you are not sure, consult the local tax and customs departments in advance, or compare the document Cai Shui [2012] No. 39, do not declare by ”feeling” to avoid stepping on the pit due to cognitive bias.

2. Regularization of declarations:Truthfully fill in the information on export goods, sales revenue, no concealment, no false, even if it is an agent for export, we must truthfully fill in the actual commissioner information, retain the freight bill, customs declaration, invoices and other documents, to achieve the ”account in line with the real, the account in line with the evidence”.

3. Rejection of irregularities:Do not export under a shell, do not look for a shell company, do not do two sets of accounts, do not cooperate with illegal intermediaries who ”low-cost agents” and ”sell export information” to avoid being implicated.

4. Sound internal compliance:Set up a person in charge of export tax declaration, regular self-check, timely attention to tax policy updates; once received the tax department's verification, make-up declaration notice, the first time to cooperate, take the initiative to pay back taxes, explain the situation, to avoid aggravation of penalties.

Final warning: compliance is not a matter of choice, it's a matter of survival!

Now, the state of the ”two high and one capital” goods export supervision, has long been not ”going through the motions” - the abolition of export tax rebates for some products, included in the processing trade ban catalog, multi-sectoral Coordinated verification, big data and accurate supervision, all irregularities have no place to hide.

The 23.8 million fine is not an isolated case, but a clear signal from the tax authorities to maintain tax security and regulate the order of the foreign trade market.For export enterprises, the intensification of foreign trade involution, thin profits is the reality, but even more difficult, can not touch the tax red line!

Getting away with tax avoidance saves a small amount of money, but once investigated, fines, late fees, damage to credibility, revocation of qualifications, and even criminal liability are enough to make a business doomed.

Need exclusive tax compliance program Immediately contact: 19076121147 (phone / WeChat the same number)

Forwarded to the side of the export business friends, peers, to remind everyone: alarm bells ringing, compliance is the only way to export enterprises in the long term!