Top court cracks down on tax evasion tactics

China's top court unveiled eight landmark tax-related cases on Monday, demonstrating the judiciary's commitment to safeguarding national tax security and maintaining order in the market economy.

It also underscores the commitment to enhance tax compliance and guide lawful tax practices through judicial measures, the Supreme People's Court said in a statement.

"Fiscal system is the foundation and a crucial pillar of national governance. Taxation is not only the primary source of fiscal revenue but also an essential tool for macroeconomic regulation," the top court stated.

"Crimes that undermine tax collection and management infringe upon national tax interests, destabilize fiscal stability, disrupt economic order, and threaten social justice and fairness," it said.

It revealed that Chinese courts have intensified the efforts to crack down on tax-related criminal activities, especially those using "yin and yang" contracts to evade taxes and secretly transferring assets to avoid tax recovery.

Yin and yang contracts, or dual contracts, refer to two documents being produced for the same agreement. One expresses the parties' true intentions, while the other, in which a lower sum is included to minimize taxation, is presented to tax agencies.

Additionally, the top court has called for stronger efforts to address cases where certain platforms misinterpret government policies intended to encourage innovation and development, instead becoming hubs for criminal activities, such as selling fake invoices.

The top court pointed out that these actions disrupt invoice management and harm national tax revenue while severely undermining the environment for fair economic development.

It urged courts nationwide to harshly punish crimes that hinder tax collection and management, stressing that "maintaining the order of the socialist market economy is a core responsibility of the judiciary."