How To Define Valid And Valid Credentials Before Deduction Of Income Tax?

In the past few years, people's attitudes towards tax planning have changed a lot.

Many technology companies, especially large multinational companies, have been criticized for tax problems.

Negative public influence may hurt the technology giants, but will have a greater impact on growth firms that are expanding and forging a reputation.

When it comes to tax matters, technology enterprises should also pay attention to other aspects.

The tax base erosion and profit pfer (BEPS) project of the organisation for economic co operation and development (OECD) aims at creating new tax rules to prohibit and punish deliberate tax avoidance.

The project will deal with the conflicts between different jurisdictions in pricing pfer. The first action is to solve the tax challenge of the digital economy, including identifying the location and mode of paying taxes in the new digital business mode.

When examining the tax related situation of H company, the tax authorities found that some of the cost and expenses of H company purchased raw materials did not get the invoice. Instead, the tax settlement statement confirmed the actual expenditure as the original voucher.

The tax authorities believe that the cost of obtaining invoices by H company can not be deducted before tax.

H company disputes with tax authorities and brings administrative proceedings.

In this case, the tax authorities and enterprises agree that the valid and valid certificate is the basis for enterprises to deduct costs and expenses before tax.

The focus of controversy between the two sides is what is "lawful and effective voucher".

The case has been closed by first instance, second instance and trial supervision.

In view of the question of what is "lawful and valid certificate", the court that made the final judgment first combed the existing laws and regulations: 1. "invoice management method" Twentieth: "all units...

Invoices shall be obtained from the payee when payment is made for goods purchased, services received and other business activities.

The twenty-first item is: "the invoice that does not conform to the regulations shall not be used as a financial reimbursement certificate".

2. article sixth of the Provisional Regulations on business tax: "the taxpayer fails to comply with the relevant laws, administrative regulations or the relevant provisions of the competent tax authorities under the State Council in accordance with the provisions of the fifth regulation of this regulation, and the amount of the certificate shall not be deducted".

3. nineteenth of the detailed rules for the implementation of the Interim Regulations on business tax: Article nineteenth, which is referred to in the regulation sixth, is in conformity with the relevant provisions of the relevant tax authorities of the State Council (hereinafter referred to as legal and valid certificates). It refers to: (1) payments made to domestic units or individuals, and the behavior of the unit or individual belongs to the scope of business tax or value-added tax collection, and the invoice issued by the unit or individual is a valid and valid certificate.

4. ninth of the Provisional Regulations on value added tax: "the VAT receipts obtained by taxpayers in purchasing goods or taxable services are not in conformity with the relevant provisions of laws, administrative regulations or the competent department of taxation under the State Council, and the input tax shall not be deducted from the amount of output tax".

5. nineteenth of the detailed rules for the implementation of the Provisional Regulations on value added tax stipulates that the voucher of value added tax refers to the special invoices for value-added tax, the special payment books for customs import value-added tax, the purchase invoice for agricultural products and the sales invoice for agricultural products and the settlement documents for pportation costs.

The court held that: from the above provisions, we can see that the object of payment is different, and the requirements for valid and valid credentials are different.

From the point of view of this case, the cost expenditure of H company is used to purchase raw materials, the object of payment is domestic units or individuals, and the production and sale of raw materials by the above units or individuals belong to the scope of value-added tax collection, so the cost of obtaining invoices is not taxable at the forefront.

In view of the conclusion of the court of final appeal, I think it is debatable for the following reasons:

First, the court conclusion lacks legal basis.

The basis for the conclusion of the court can be divided into 1. parts: the basis of invoice management method; 2. the basis for the relevant regulations of the business tax; and 3. the basis for the relevant laws and regulations on value-added tax.

However, the above evidence can not be regarded as the premise that the court should draw the bill as the only valid legal certificate.

1. the twentieth provision of the invoice management stipulates that the unit paying the bill has the obligation to take out the invoice from the collecting party, but it does not stipulate what is lawful and valid certificate, nor does it stipulate what legal responsibility the payment unit can fulfill if it has fulfilled the obligation to claim the invoice.

The twenty-first rule of invoice management excludes the invoice which does not conform to the regulations as a financial reimbursement certificate, but the clause itself can not be used as the basis for supporting the invoice as the only valid legal certificate.

2. the sixth section of the Provisional Regulations on business tax and the nineteenth rules for the implementation of the Provisional Regulations on business tax do stipulate that the certificate obtained is not in conformity with the relevant provisions of the laws, administrative regulations or the competent department of taxation under the State Council. The amount of the project shall not be deducted and the amount paid to the units or individuals in the territory shall be clearly defined. If the acts of the unit or individual occur within the scope of the business tax or value-added tax, the invoice issued by the unit or individual is a valid legal certificate.

However, in conjunction with the fifth section of the Provisional Regulations on business tax, it can be found that the provision stipulates that some of the taxable items can be deducted from the total turnover as the basis of Taxation, and the sixth provision of the Provisional Regulations on business tax is a supplement to the fifth item, that is, "deducting the relevant items" needs to get legal credentials.

The nineteenth rule of implementing the Interim Regulations is a detailed description of the sixth section of the Provisional Regulations on business tax.

Therefore, any explanation of the concept of "valid and valid certificate" in these two clauses should be limited to the fifth section of the Provisional Regulations on business tax. The extension of this concept is different from the extension of the "valid and valid certificate" before deducting the enterprise income tax.

The court should not invoke the two provisions as the basis for judging the "valid and valid certificate" before deducting the enterprise income tax.

3. in this case, H company is a taxpayer who purchases the goods or taxable services stipulated in the ninth regulation of the Provisional Regulations on value added tax. However, the focus of the dispute is not whether H company can deduct the added tax input tax included in the purchased goods. In fact, the H company has not deducted the VAT input tax that has not yet obtained the invoices purchased.

Therefore, the ninth rules of the Provisional Regulations on value added tax and the nineteenth detailed rules for the implementation of the Provisional Regulations on value-added tax shall not serve as the basis for the conclusion that "the receipt of invoices can not be paid at the expense of the former" shall be the nineteenth item.

Two. In accordance with the court's conclusion, it will be unreasonable to increase the liability of taxpayers who purchase goods or services.

In bilateral pactions, each party can exercise its rights and obligations only in accordance with its own wishes in lawful and good faith. If one side fails to perform its statutory obligations due to subjective fault, the other party shall not be liable accordingly.

The nineteenth article of "invoice management method" stipulates: "the units and individuals who sell goods, provide services and engage in other business activities, collect money for foreign business operations, and the payer shall give invoices to the payer".

It is evident that the payee has a statutory obligation to invoke.

In this case, if H company can prove that it has fulfilled its obligation to collect invoices from the collecting party by way of contract agreement, H company has no fault for not obtaining the invoice, while the receiver does not perform the statutory obligation of invoicing, and there is subjective fault.

According to the conclusion of the court decision, the payer should bear the legal liability of the receiver's fault, which is obviously unreasonable and contrary to the principle of fairness, because in the civil paction, the payer can neither control the receiver's subjective will nor monitor the beneficiary's behavior in real time.

The eighth provision of the enterprise income tax law stipulates: "what happens in the enterprise is related to income and reasonable expenses.

It is allowed to deduct when calculating taxable income. "

Therefore, if a taxpayer can prove that a reasonable and reasonable expenditure has been obtained through the legal valid certificate and does not belong to the expenses that can not be deducted before tax, as stipulated in the tenth section of the enterprise income tax law, it shall be allowed to deduct the amount of taxable income when it is calculated.

Specifically, in this case, H company confirmed that the actual expenditure was confirmed by the statement of settlement, and the evidence of raw materials entry documents proved that H company did have expenditure and its expenditure was related to income.

In the absence of other evidence that the expenditure does not exist or has nothing to do with income, the court has no legal basis for the proof of the settlement bill and the raw material storage list as evidence because of the lack of invoices from H.

The legal and effective vouchers for pre tax deduction of enterprise income tax should be understood as follows:

First, the evidence must prove that the business has actually generated revenue related and reasonable expenditure.

Even if the certificate can prove that the expenditure does exist, it does not mean that the tax can be paid to the forefront. For example, if an enterprise pays personal travel expenses for investors, even if any certificate including invoices is proved to have real expenditure, it can not be paid at the forefront of the tax, because it has nothing to do with income. For example, the enterprise can purchase the raw materials from overseas related parties at an unreasonable high price, and its expenditure can not be fully charged, because the expenditure is not reasonable.

Second, vouchers should be legality.

On the one hand, as the original basis of accounting, credentials should conform to the provisions of accounting law.

The thirteenth provision of the accounting law stipulates that "no unit or individual shall forge or alter accounting vouchers". The fourteenth provision provides that "all contents recorded in the original voucher shall not be altered. If the original voucher is wrong, it should be re opened or corrected by the issuing unit, and the unit seal should be added to the corrections."

If the amount of the original certificate is wrong, it should be re opened by the issuing unit and not corrected on the original voucher. "

Any voucher, including invoices, does not belong to a valid legal document if it violates the above provisions.

On the other hand, the certificate should comply with the tax law, that is, the tax collection and management law, the invoice management method and the enterprise income tax law.

Therefore, it does not conform to the invoice stipulated in the invoice management method, shall not be used as a financial reimbursement certificate, nor can it be placed at the forefront of taxation.

Third,

It should be effective.

If the economic activity reflected by the certificate is not in conformity with the real economic activity, the certificate is invalid.

For example, when an enterprise purchases goods and pays the amount in the current year, the recipient collects invoices over the years, and if the enterprise pays the cost of the invoice for second years, the certificate is invalid, because the economic activity reflected by the invoice differs from the real paction in the accounting year and the enterprise income tax settlement.

No matter what credentials, as long as the above three conditions are met at the same time, it is possible to prove that the enterprise has incurred a real and reasonable expenditure related to income, that is, it should be recognized that it belongs to the "valid and valid certificate" before deducting the enterprise income tax before tax, and is not only limited to the invoice.

Enterprises need to pay attention to: 1., if the payer fails to obtain the invoice, the payment party shall prove that he has no fault in the paction through written contracts and communication records, that is, he has fulfilled the legal definition of invoicing in accordance with the requirements of the twentieth "invoice management method"; 2., the "valid and valid certificate" used to collect the cost cost before the enterprise income tax is different from the extension of "valid and valid certificate" for other purposes, and can not be confused.

For example, the voucher for deducting the VAT input tax or the deduction of business tax turnover shall be regulated by the relevant laws and regulations of VAT and business tax respectively.

In view of the normative effect of the tax collection and management law and the invoice management method on all kinds of taxes, the prohibition norms and mandatory norms of vouchers in the tax collection and management law and the invoice management method are the bottom line for the issuance, acceptance and use of all tax vouchers.

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