Interpretation of “Management Measures for Information Disclosure of Major Tax Trust-breaking Subject”

        Recently, the State Administration of Taxation (SAT) announced the Measures for the Administration of Information Disclosure of Major Trust-breaking Subject of Tax Law (ORDER No. 54 of the STATE Administration of Taxation), and the relevant matters are interpreted as follows:

        I. Revision background

        To implement the general office of the central committee of the communist party of China, the State Council general office “the opinion on further deepening the reform of the tax collection and administration” and “The General Office of the State Council on further improve the system of faithless constraint guidance of building a long-term mechanism of building (countries do hair [2020] no. 49), further promote the major tax illegal breach case management, standardize the management process, administrative power, To effectively protect the legitimate rights and interests of administrative counterparts and give better play to the function of tax credit mechanism in stimulating market vitality and creating a sound business environment, the State Administration of Taxation has revised the Measures for Information Disclosure of Major Tax Trust-breaking Cases (Announcement No.54 of the State Administration of Taxation of 2018, hereinafter referred to as the original Measures). It was renamed the Measures for The Administration of Information Disclosure of Major Tax Faithless And Illegal Entities, and promulgated and implemented in the form of departmental regulations.

        In 2014, the State Administration of Taxation formulated the Measures for Information Disclosure of Major Tax Violation Cases (Trial), and revised the measures twice in 2016 and 2018. Since its implementation, the original measures have played an important role in deterring illegal tax acts and guiding tax payment in good faith according to law, and achieved good results. In recent years, The State Council has made new arrangements and put forward new requirements for perfecting the trust-breaking restraint system and constructing the long-term mechanism of trust-breaking construction. The original measures have some deficiencies in the determination of trust-breaking subjects and the standard of repair procedures, so it is necessary to revise and improve them.

        II. Principles of revision

        (I) Strengthening protection of rights. The protection of the legitimate rights and interests of the parties runs through the whole process of releasing trust-breaking information. To protect the right to know in advance, and to inform the parties of the relevant causes, basis, planned disciplinary measures for trust-breaking and rights they enjoy according to law before making a decision to determine the subject of trust-breaking; Safeguard the right of objection in the event, and timely review of the statements and arguments put forward by the parties; The right to apply for trust-breaking information shall be stopped in advance, and the audit shall be accepted in time and the audit results shall be informed.

        (II) Strictly restrict law enforcement activities. Comprehensively standardize the law enforcement procedures related to the determination of trust-breaking subjects, punishment of trust-breaking and the cessation of the announcement of trust-breaking information in advance, clarify the functions and powers of tax authorities at all levels, refine the work procedures of determination of trust-breaking subjects, information disclosure, credit repair and other links, and ensure that the relevant work operates within the track of rule of law.

        (III) Focusing on solving practical problems. Focus on solving the problems existing in the implementation of the original measures, such as: appropriately raise the amount standard involved in some of the illegal acts included in trust-breaking subjects, so as to achieve the same penalty; To adapt to the new situation of tax collection and administration, illegal tax agents and related parties assisting tax evasion and fraud shall be included as trust-breaking subjects.

        II. Key contents of the revision

        These measures are divided into five chapters (general provisions, determination of trust-breaking subject, Information Announcement, Early cessation of announcement, supplementary Provisions), a total of 27. Major amendments include:

        (I) To add the expression “protecting the lawful rights and interests of tax administrative counterparts” to the legislative purpose. Article 1 takes “protecting the legal rights and interests of tax administrative counterparts” as one of the legislative purposes, and fully implements the requirements of safeguarding the legal rights and interests of taxpayers as proposed in the Opinions on Further Deepening the Reform of Tax Collection and Administration.

        (II) Increasing the protection of personal information of trust-breaking subjects. In accordance with the regulations on optimizing the Business Environment, it is stipulated in Article 4 that the tax authorities shall keep confidential the business secrets, personal privacy and personal information they know in the information disclosure management of trust-breaking subjects.

        (III) Clarifying the criteria for determining trust-breaking subjects. Giving full consideration to the consistency and rationality of the determination of trust-breaking subjects, in article 6 on the determination standard of trust-breaking subjects, the amount of evading and recovering tax arrears shall be raised from 100,000 yuan to more than 1 million yuan, and the amount of falsely issued VAT ordinary invoice shall be raised to more than 4 million yuan. At the same time, tax withholding agents who fail to pay or underpay the tax withheld or collected and the amount is more than 1 million yuan shall be treated as tax-related parties who illegally provide convenience for taxpayers or withholding agents, resulting in the failure to pay or underpay tax of more than 1 million yuan or defrauding the State of export tax refund. Four types of tax law-breaking subjects, including tax agents who caused taxpayers to fail to pay or underpay tax of more than 1 million yuan, will be included in the scope of trust-breaking subjects.

        (IV) Clarifying relevant provisions on safeguarding parties’ right to know and right to present and defend. It is stipulated in Article 8 that tax authorities should inform the parties of their legal rights before determining the trust-breaking subject, and it is added in Article 9 that provisions on timely review of the parties’ statements and defense opinions are added to protect the legitimate rights and interests of the parties.

        (V) Increase the time limit for determining trust-breaking subjects and releasing information about trust-breaking subjects. In article 10, it is clear that tax authorities shall make documents confirming trust-breaking subjects within 30 days after the expiration of relevant time limits or the effective date of relevant documents, and in article 11, tax authorities shall publish information about trust-breaking to the public within 15 days of the next month after the documents confirming trust-breaking subjects are served.

        (VI) Increasing the circumstances in which the subject of trust-breaking is not disclosed. Article 11 stipulates that the tax authorities shall not disclose the exception cases of trust-breaking subjects, that is, information determined as state secrets according to law, information prohibited from disclosure by laws and administrative regulations, and information that may endanger national security, public security, economic security and social stability after disclosure.

        (VII) Further standardizing the disclosure of trust-breaking information to the public. In order to protect the legitimate rights and interests of tax administrative counterparts, article 12 explicitly announces only the legal representative, the person in charge or the person actually responsible when the illegal act occurs, and no longer announces the basic information of tax-related professional service institutions and practitioners directly responsible for major tax violation and trust-breaking cases.

        (VIII) clearly stipulate the conditions for applying for an early cessation of publication. In order to encourage trust-breaking subjects to take the initiative to correct illegal behaviors, actively assume social responsibilities and rebuild good credit, it is clearly stipulated in Article 18 that trust-breaking subjects that meet the three types of conditions can apply to tax authorities to stop publishing trust-breaking information in advance.

        (IX) Clarifying the materials that should be submitted when applying for an early cessation of publication. In order to reduce the tax burden of the parties concerned, in accordance with the principle of necessity, Article 19 clarifies the materials that should be submitted under different circumstances when the parties concerned apply to stop publishing in advance.

        (X) Strict examination and approval procedures for stopping publication in advance. If a trust-breaking subject meeting the requirements specified in Article 20, Article 21 or Article 23 applies for the cessation of publication in advance, the tax authority shall, after submitting the application to the leadership of the bureau at the prescribed level for examination and approval, make a decision to approve the cessation of publication within 15 days after accepting the application, and stop publication within 5 days.

        (XI) Increasing the number of cases in which publication is not stopped in advance. In order to reflect the principle of “balancing justice with mercy” and “matching punishment with punishment”, article 22 clearly stipulates that the announcement shall not be stopped in advance for those who are identified as trust-breaking subjects twice or more within five years and are punished for tax violations such as evasion, fraud, and false invoice writing after being identified as trust-breaking subjects.

        (XII) Increasing provisions on credit training. As stipulated in Article 24, tax authorities may organize their legal representatives and financial leaders to participate in credit training for trust-breaking subjects who apply to stop publication in advance, so as to strengthen positive guidance for trust-breaking subjects.

Article source：General Office of the State Administration of Taxation