GuoShuiFa [1997] No.134 August 8, 1997

The state tax bureaus of various provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan:

It is enquired recently by the local state tax bureaus how to handle the false added-value special invoice obtained by the taxpayers (hereinafter referred to special invoice). Through studying, it is clarified as follows:

I. The drawees who apply the taxation institutions for tax deduction in use of the false special invoice drawn by others for purpose of tax dodging should recover the tax and be fined under five times of dodging tax according to the Law of the People's Republic of China on Tax Collection and relevant regulations. If income tax is larger than sales tax, the remaining income tax should be adjusted and reduced. Those who defraud the exports tax rebate by way of drawing the false special invoice should recover the tax in accordance with the law and be imposed fine of under five times amount of defrauded tax.

II. If the buyers apply the taxation institutions for tax deduction or exporting or exports tax rebate by means of the invoice drawn by the 3rd party or the invoice of the place where the goods is not sold, the tax should be recovered and fine under five times of dodging tax be imposed in accordance with the Law of of the People's Republic of China on Tax Collection and relevant regulations.

III. The taxpayers holding the invoice hereinabove who do not apply the taxation institutions for tax deduction or exports tax rebate should be imposed fine of under 10 thousand RMB based on the copies of the invoice obtained in accordance with the Measures of the People's Republic of China on Administration of Invoices and the relevant provisions. Those who know or should know the special invoice is false or those who have the others draw the false special invoice should be punished seriously.

IV. If tax-dodging or tax-defrauding constitutes a crime by means of false special invoice, the taxation institutions should handle in an administrative manner such as recovering the tax and then transfer to the legal institutions for the criminal responsibility.

Promulgated by The State Administration of Taxation on 1997-8-8