By Tony Dong and Daisy Duan King & Wood Mallesons’ Taxation Group
The invoice plays an indispensable role in economic activity and business operations in China. It also plays an important role in tax scrutiny when tax authorities are collecting taxes and combating tax evasion. It is reported that in 2013, the tax authorities investigated 91,000 cases of selling or producing false invoices or the illegal issuing of invoices and 130 million illegal invoices were uncovered. Invoice-related non-compliance is found frequently in certain industries such as real estate, construction and installation, medicine and medical equipment, power generation and supply, catering and entertainment, and the education or training industry. The tax authorities have identified 89,000 entities that have illegal invoices issues, and they are pursuing taxes of more than RMB 13.8 billion.
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