How false invoicing to extract funds is handled and the legal basis
Using false invoices to extract state funds is a serious illegal act and seriously damages national fiscal security. If a state functionary takes advantage of his position to embezzle, steal, defraud, or by other illegal means possess public property, it constitutes the crime of corruption.
For state organ personnel who did not engage in favoritism or malpractice in the review work and did not cause serious consequences, the matter may be transferred to discipline inspection and supervision departments for Party discipline or administrative disciplinary treatment.
If a person colludes with the above-mentioned personnel and jointly commits corruption, he shall be punished as an accomplice. According to Article 383 of the Criminal Law of the People’s Republic of China, the penalties for the crime of corruption are as follows: (1) where the amount of corruption is relatively large or the circumstances are relatively serious, the sentence shall be fixed-term imprisonment of not more than three years or criminal detention, and a fine shall also be imposed; (2) where the amount of corruption is huge or the circumstances are serious, the sentence shall be fixed-term imprisonment of not less than three years but not more than ten years, and a fine or confiscation of property shall also be imposed.
Legal basis: Article 205 of the Criminal Law of the People’s Republic of China provides that whoever falsely issues special value-added tax invoices or other invoices used for fraudulently obtaining export tax refunds or deducting taxes shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined not less than RMB 20,000 but not more than RMB 200,000; where the amount of falsely issued tax is relatively large or the circumstances are serious, the sentence shall be fixed-term imprisonment of not less than three years but not more than ten years.
Using false invoices to extract cash violates the Measures of the People’s Republic of China for the Administration of Invoices. Falsely issuing value-added tax invoices is an act violating the Criminal Law of the People’s Republic of China. Acts of false invoicing include: having others issue invoices for oneself that do not conform to actual business operations; issuing invoices for others or for oneself that do not conform to actual business operations; introducing others to issue invoices that do not conform to actual business operations.
Filing threshold for falsely issuing invoices to obtain state funds
The filing threshold for falsely issuing invoices to obtain state funds is as follows: where the number of falsely issued invoices is more than 100 or the cumulative amount reaches more than RMB 400,000, where within five years a person has already received administrative punishment for false invoicing on more than two occasions and afterwards again engages in false invoicing, or where other serious circumstances exist, criminal responsibility shall be pursued.
According to Article 2 of the Supplementary Provisions on the Standards for Filing and Prosecution of Criminal Cases Under the Jurisdiction of Public Security Organs (II), where a person falsely issues invoices other than those stipulated in Article 205 of the Criminal Law and is suspected of any of the following circumstances, a case shall be filed and prosecuted: (1) falsely issuing more than 100 invoices or a cumulative amount of more than RMB 400,000; (2) although the above amount standards are not reached, within five years the person has received administrative punishment twice or more for false invoicing.
Where the actor falsely issues more than 100 invoices or the cumulative amount reaches RMB 400,000 or more, the case shall be filed; where within five years the actor has received administrative punishment twice or more for false invoicing and then again commits false invoicing, the case shall be filed; where the false invoicing conduct involves other serious circumstances, the case shall be filed.
Nature and handling of public officials’ use of false invoices to extract cash
The so-called “invoice running” refers to the act of enterprises or individuals, in purchase and sale activities, fabricating transaction facts through such means as falsely issuing, issuing on behalf of others, or tampering with value-added tax invoices, in order to achieve illegal purposes such as fraudulently obtaining taxes, extracting cash, or falsely inflating performance. This conduct seriously violates national tax regulations, damages national tax interests, and easily breeds corruption and economic crimes.
Using false invoices to extract cash violates the Measures of the People’s Republic of China for the Administration of Invoices. Falsely issuing value-added tax invoices is an act violating the Criminal Law of the People’s Republic of China. Acts of false invoicing include: having others issue invoices for oneself that do not conform to actual business operations; issuing invoices for others or for oneself that do not conform to actual business operations; introducing others to issue invoices that do not conform to actual business operations.
Issuing invoices in the name of purchasing office supplies to extract cash is a criminal act. If the amount reaches the criminal standard, it constitutes a crime. According to Article 205-1 of the Criminal Law, whoever falsely issues invoices other than those specified in Article 205 of this Law, where the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than two years, criminal detention, or public surveillance, and shall also be fined; where the circumstances are especially serious, the sentence shall be fixed-term imprisonment of not less than two years but not more than seven years, and a fine shall also be imposed.
As for funds of illegal origin of the company, they no longer belong to legally protected interests, and there is no necessity for criminal law protection. The defendant’s act of misappropriating the above funds is similar to causing unequal distribution within the company of illicit funds obtained from illegal acts. It is only necessary to handle according to law the company’s illegal conduct of extracting funds through false invoicing and even conduct suspected of tax evasion crimes.
This depends on the specific circumstances. Mere knowledge without reporting generally does not incur criminal liability. However, if one accepts instructions and cooperates, he may be treated as an accomplice. Conduct carried out under a leader’s instructions does not constitute a ground excluding illegality, but it may be argued as a basis for mitigation of punishment.
Using false invoices to extract cash is usually described as improper financial operation, that is, obtaining bank cash through forged invoices and then using the cash for consumption not originally intended. This process is often accompanied by concealing the actual withdrawal and use of cash in accounting records, attempting to create the appearance of a false flow of funds in financial statements.
Whether falsely issuing invoices to extract company funds to give subsidies to employees constitutes a crime
Falsely issuing special value-added tax invoices or falsely issuing other invoices used for fraudulently obtaining export tax refunds or deducting taxes constitutes a crime. Falsely issuing other invoices outside the above provisions, where the circumstances are serious, also constitutes a crime. The act of extracting funds to give subsidies may then be suspected of occupational embezzlement or corruption.
Using false invoices to extract state funds is guilty conduct. Extracting state funds is illegal conduct. If a state functionary takes advantage of his position to embezzle, steal, defraud, or by other means illegally possess public property, it constitutes the crime of corruption.
The handling of village cadres who use false invoices to extract collective funds is based on the Criminal Law of the People’s Republic of China. Article 266 of the Criminal Law, the crime of fraud, provides that whoever swindles public or private property, where the amount is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and may in addition or exclusively be fined; where the amount is huge or there are other serious circumstances, the sentence shall be fixed-term imprisonment of not less than three years but not more than ten years, and a fine shall also be imposed.
If false invoices are used to extract RMB 5,000 in Party membership fees, that is criminal conduct. First, going to issue false invoices is a crime, and second, extracting Party membership fees is also a crime.
Illegal nature of using false invoices to extract cash
As for funds of illegal origin of the company, they no longer belong to legally protected interests, and there is no necessity for criminal law protection. The defendant’s act of misappropriating the above funds is similar to causing unequal distribution within the company of illicit funds obtained from illegal acts. It is only necessary to handle according to law the company’s illegal conduct of extracting funds through false invoicing and even conduct suspected of tax evasion crimes.
The handling of village cadres who use false invoices to extract collective funds is based on the Criminal Law of the People’s Republic of China. Article 266 of the Criminal Law, the crime of fraud, provides that whoever swindles public or private property, where the amount is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and may in addition or exclusively be fined; where the amount is huge or there are other serious circumstances, the sentence shall be fixed-term imprisonment of not less than three years but not more than ten years, and a fine shall also be imposed.
It is an illegal and criminal act for public officials to use false invoices to extract cash. If the circumstances are serious, it constitutes the crime of falsely issuing value-added tax invoices.
How to handle cases where enterprises falsely issue invoices and public officials extract state funds
In official consumption, expenses for personal entertainment activities and non-public consumption, such as training fees, book and periodical fees, commercial insurance, therapeutic health care, and the like, must be borne by individuals and may not use public funds. Paying expenses for relatives and children, or bearing other expenses that should be borne personally, must likewise be strictly restrained to ensure a clear distinction between public and private matters.
According to Articles 164 to 168 of the Criminal Law, crimes such as bribery, illegal operation of similar business, illegally seeking benefits for relatives and friends, being defrauded due to dereliction of duty in signing or performing contracts, and dereliction of duty by personnel of state-owned companies, enterprises, and public institutions shall be punished according to law.
In addition, there is also transfer of jurisdiction or jurisdiction designated by a higher people’s court. According to the relevant provisions of the Criminal Procedure Law: basic-level people’s courts have jurisdiction over ordinary criminal cases of first instance, except where higher people’s courts have jurisdiction according to law. Intermediate people’s courts have jurisdiction over the following criminal cases of first instance: (1) cases endangering national security and terrorist activity cases; (2) cases where life imprisonment or the death penalty may be imposed.
Legal analysis: (1) relevant cases under Chapter Two of the Special Provisions of the Criminal Law, Crimes Endangering Public Security; (2) relevant cases under Chapter Three of the Special Provisions of the Criminal Law, Crimes Disrupting the Order of the Socialist Market Economy.