1. Basic case
On August 15, 2015, Party A and Party B signed a "Sales Contract (Steel)". A purchased steel from Party B. The product name is channel steel, steel plate, seamless pipe, welded pipe, and I-shaped steel. The total quantity is 1,716 tons, with an amount of 5140,150 yuan. Party B issued a special value-added tax invoice to Party A on August 21 and 25, 2015, with a total amount of 4324,117.52 yuan, a tax amount of 735,100.08 yuan, and a total amount of 5059,217.6 yuan, a total of 44 pieces. Party A paid a total of 3 bank acceptance bills to Party B on December 3, 2015, October 27, 2015 and October 27, 2015 respectively, totaling 3 bank acceptance bills of RMB 4.5 million.
On July 13, 2016, Party A and Party B signed the "Agreement on Account Closing and Contract Termination", confirming that Party B had delivered some of the goods as promised, with the total supply settlement price of RMB 5059,217.6. As of July 12, 2016, Party A had paid Party B 4.5 million yuan in payment, and still owed RMB 559,217.6. Party A repays Party B in the form of supplying steel to Party B. Later, Party A issued a special value-added tax invoice with an amount of 479,768.24 yuan to Party B, and still owed Party B 79,449.36 yuan in payment.
On August 6, 2019, an inspection bureau of the Beijing Taxation Bureau of the State Administration of Taxation issued a tax handling decision, determining that Party A had illegal facts in the tax declaration and payment from January 1, 2015 to December 31, 2015. The illegal facts were mainly: Party A purchased steel for the project for the project structure and its ancillary facilities due to project needs, and signed a "Steel Sales Contract" with Party B. Later, B issued 44 special value-added tax invoices to Party A. The 44 invoices Party A had certified and deducted in August 2015 and September 2015, and had not made any input tax transfer. This batch of steel was sold and carried forward in August, September and December 2015. The costs involved were deducted before income tax in 2015. The business of both parties was completed and no business transactions occurred in the future. However, the above 44 special invoices have been classified by the Inspection Bureau as false value-added tax special invoices, so Party A is not allowed to deduct the input tax amount of the above 44 special invoices.
Based on this, a certain inspection bureau of the Beijing Municipal Taxation Bureau of the State Administration of Taxation made a handling decision: 1. Value-added Tax: The above 44 confirmed false VAT special invoices obtained by Party A of cannot deduct the tax amount of VAT. The value-added tax should be supplemented in October 2015; 2. Urban maintenance and construction tax: Party A of should pay 51,457.01 yuan in October 2015; 3. Education surcharge: Party A should pay a supplementary surcharge of 22,053 yuan for education in October 2015; IV. Local education surcharge: Party A should pay a supplementary 14,702 yuan for education in October 2015; V. Corporate income tax : Party A submitted information to confirm the authenticity of its expenditure and meets the pre-tax deduction conditions. It is recommended that enterprises be allowed to deduct the costs corresponding to the above 44 invoices before tax; VI. Late payment fee: adds corresponding late payment fee to the above-mentioned taxes.
On August 12, 2019, Party A paid tax payment, the projects were: urban maintenance and construction tax of RMB 51,457.01, education surcharge of RMB 22,053, value-added tax of RMB 735,100.08, local education surcharge of RMB 14,702, value-added tax of RMB 501,705.8 (latest fee), and urban maintenance and construction tax of RMB 35,119.41 (latest fee), totaling RMB 1,360,137.3. Party A believes that the above tax losses were all caused by illegal invoices issued by Party B, and sued Party B to the court to compensate Party A for the taxes and late payment fees of 1360,137.3 yuan and interest losses.
2. Court judgment
After trial, the court held that during the performance of the sales contract between the two parties, the act of 44 special VAT invoices issued by Party B to Party A was determined by the tax authorities as a false VAT invoice issuance, resulting in Party A being unable to deduct the loss. Party B's false issuance of value-added tax invoices has constituted a breach of contract, and he shall bear the corresponding breach of contract liability and compensate for the losses caused by Party A. Party A has paid the taxes to the tax authorities at the same time and paid the late payment fee, with actual economic losses totaling 1360,137.3 yuan. Party B shall compensate for the losses of Party A, and Party B shall be ordered to compensate Party A for the taxes and late payment fee losses totaling 1360,137.3 yuan and compensate for the interest loss of overdue payments.
3. Lawyer's evaluation
Beijing Yingke (Zhengzhou) Lawyer Wu Jianhua reminded that this case is a very typical case of tax loss recovery. In addition to the tax loss caused by false VAT special invoices in the case, there are cases in which the seller fails to issue an invoice or does not comply with the agreement, which leads to the purchaser being unable to deduct tax losses.
For the tax losses of the purchaser caused by invoices, from a civil law, it is a breach of contract loss caused by the performance of the contract. According to the relevant provisions of the Civil Code, the scope of compensation for losses shall be equivalent to the losses caused by breach of contract, including the benefits that can be obtained after the performance of the contract. However, it shall not exceed the losses that the breach of contract is foreseen or should have foreseen when the breach of contract concluded. In practice, there are cases that have negative attitudes toward compensation for tax losses, the main reason is that the tax losses are not actually generated and the losses cannot be calculated in detail.
From the above cases, the composition of tax losses provides us with important reference value. "Possible tax losses" mainly include: value-added tax, urban maintenance and construction tax, education surcharge, local education fee attachments, corporate income tax, late payment fees, etc. If it is a taxable consumer product, there may also be losses in consumption tax. The reason why "possible tax losses" is used is that different companies, taxpayers of different natures (general taxpayers and small-scale taxpayers), different value-added tax invoices (special invoices and general invoices), etc. may cause different tax losses to the purchaser. For example, in the above case, Party A did not cause losses to corporate income tax, because the invoice is not the only certificate of pre-tax deduction for corporate income tax. There is other evidence to prove the authenticity of its expenditure and meets the pre-tax deduction conditions. Corporate income tax can also be deducted before tax.
However, for tax losses caused by uninvoices, the author believes that it should be supported in accordance with the law and will be distinguished in the specific calculation. For example, in the above case, the court fully supported Party A's losses because the part of the losses had actually occurred and Party A had paid to the tax authorities and could provide corresponding certificates. For tax losses that have not been actually incurred, the specific types of losses and amounts of losses can be calculated based on the purchaser's tax payment situation and evidence. Here, I would like to remind you again that in the breach of contract liability clauses for contracts with large amounts, the calculation method for breach of contract liability or the loss caused by breach of contract that is clearly stipulated in the invoice, so as to avoid dyscalculation of tax losses in litigation.
