From "Imprisonment" to "Case Withdrawal": The Successful Defense of Suspect X in the Case of Illegally Purchasing Value-Added Tax Special Invoices

Preface

In August 2024, the public security authorities initiated an investigation into suspect X on suspicion of illegally purchasing value-added tax special invoices. In early October 2024, suspect X was placed under compulsory measures for bail pending trial due to suspicion of illegally purchasing value-added tax special invoices. During the review and prosecution stage, the upstream invoicing party (Company A) and the downstream recipient party (Company B) were handled separately: The upstream invoicing party suspect Mr. R was first convicted and sentenced for the crime of illegally selling value-added tax special invoices, and was sentenced to a term of imprisonment; The downstream recipient party suspect X (the company's legal representative) after two times of returning to the public security authorities for supplementary investigation during the review and prosecution stage, ultimately made a decision to withdraw the case and lift the bail pending trial - In the opposite offender structure where the upstream party has been sentenced to imprisonment, the recipient party suspect X ultimately obtained an acquittal result.

01 Overview of the Case

The suspect X, the legal representative and actual controller of Company B, was the main offender who made the decision for the company's two types of illegal tax avoidance business with no real transaction background. The first type was the "employee salary splitting" business, the operation mode was: Company B paid most of the employee salaries to Company A, Company A deducted 6% value-added tax and corresponding invoicing fees, and then through its flexible employment platform, the Company A "distributed" a certain amount of salary to the employees, thereby limiting the amount of salary paid by Company B on the books to a specific amount to minimize personal income tax; The second type was the "shareholder dividend settlement" business, the operation mode was: Company B, in the name of fictitious "promotion service fees", transferred the legally taxable shareholder dividend funds to Company A, Company A deducted the corresponding tax points and invoicing fees, and then the upstream suspect Mr. R through his personal account, directly transferred the remaining funds to the private accounts of suspect X and his wife, thereby evading dividend tax and personal income tax.

The public security authorities determined that X was suspected of illegally purchasing 469 value-added tax special invoices, with a total value and tax amount of 82 million yuan, and a tax amount of 4.6 million yuan. Among them, 453 invoices had been declared for tax deduction, and the tax deduction amount was nearly 4 million yuan. Moreover, the funds had a return of 8.2 million yuan.

02 Difficulties in Defense

When accepting the case, it was already at the review and prosecution stage. The main difficulties in defense are as follows:

Difficulty One: Strong pressure from the upstream party having been sentenced to imprisonment

In tax-related joint crimes, "seller" and "buyer" form an opposite offender. The conviction of one party often has a strong "established fact" effect on the other party. In this case, the upstream party - Company A, the invoicing party, and the businessperson suspect Mr. R - had been convicted of the crime of illegally selling value-added tax special invoices and sentenced to imprisonment. This upstream conviction constitutes the most direct pressure in the defense of this case:

First, the procuratorial authorities are likely to be influenced by the effective judgment of the upstream party, tend to follow the characterization and maintain the charges, believing that the seller is guilty and the buyer cannot be innocent;

Second, in the opposite offender structure, if the recipient party is acquitted while the upstream party has served the sentence, it may raise doubts about the imbalance in sentencing between the upstream and downstream, increasing the decision-making pressure for the procuratorial authorities to make an unprosecution decision;

Third, after the investigation and prosecution of this case, it remained at the review and prosecution stage and did not enter the court trial. Under the "opposing wind" of the upstream party having been sentenced to imprisonment, it is no less difficult to secure the "release from bail pending trial + withdrawal of the case" of an acquittal result in the review and prosecution stage than "pulling teeth from a tiger's mouth".

Difficulty Two: Huge amount involved and conclusive evidence of funds return, great resistance to breakthrough in the review and prosecution stage

The total price and tax amount involved in this case was as high as 82 million yuan, and the tax amount was 4.6 million yuan. Under the current judicial practice and the leniency system for guilty pleas, the public security authorities and the procuratorial authorities often form a consensus of "serious cases should be treated seriously" before transferring to the review and prosecution stage. Facing such a huge amount of involved money, judicial authorities are prone to fall into the "big case mindset", thereby narrowing the space for accepting defense opinions. Moreover, Mr. R, the upstream suspect, transferred over 8.2 million yuan to the private account of suspect X, which is objectively verified. Under the suppression of the "big case mindset" and the solid evidence of "funds return", the defense work faces extremely significant practical resistance. It is necessary to confront and solve this core evidence chain at the review and prosecution stage.

Difficulty 3: The objective behavior manifestation is highly consistent with the legal provisions of Article 208 of the Criminal Law, "Illegally Purchasing Value-Added Tax Special Invoices". The legal grounds for exoneration are limited.

From the perspective of formal logic and textual interpretation, the objective behavior of suspect X "paying the invoice fee and obtaining the invoice" can easily be mechanically included within the scope of the textual interpretation of Article 208 "Illegally Purchasing Value-Added Tax Special Invoices". If the defense work wants to break through the constraints of the textual interpretation, it must explore the path of substantive interpretation at the legal level, which poses extremely high requirements for the criminal jurisprudence foundation and systematic thinking of the defenders.

Difficulty 4: Flexible employment and the act of illegally purchasing value-added tax special invoices are intertwined, existing in a cognitive ambiguity gray area.

"Flexible employment" is originally a new type of employment and settlement model that is compliant. However, once enterprises depart from the real business scenario and obtain invoices through platforms for internal settlement or fund transfer, they are prone to touch the criminal red line of Article 208 "Illegally Purchasing Value-Added Tax Special Invoices". The determination boundaries of the two in legal terms still have a blurry area, and this practical cognitive divergence significantly increases the communication cost and defense difficulty between the prosecution and the defense.

03 Lawyer's Perspective

Facing multiple pressures, Chen Shilei and Zhong Yuxin lawyers established a "defensive strategy of qualitative exoneration" three-dimensional defense approach, which can be summarized as a four-level progressive argument system (objective element discrimination - behavioral essence discrimination - subjective purpose discrimination - progressive exoneration), and were supported by "theory + judicial interpretation + Supreme Court cases". These four levels aim to "exonerate", forming multiple guarantees combining determination and theory.

The first level: Objective element discrimination - the source of criminalization, blank invoice object requirements, and VAT loss

The crime of illegally selling or purchasing value-added tax special invoices originated from the 1994 VAT reform and the 1995 "Decision on Punishing the Illegitimate Sale, Forgery, and Illegal Sale of Value-Added Tax Special Invoices". Its regulatory focus has always been to crack down on the illegal circulation and transaction of blank value-added tax special invoices. Starting from the criminal composition of Article 208, the criminal object of this crime should be limited to blank invoices - only blank invoices have the possibility of "also being falsely issued or sold"; once the invoice is completed filling, it cannot be falsely issued again and cannot achieve secondary circulation, which is contrary to the normative purpose of this crime.

In this case, during the cooperation period between B, the recipient company, and A, the involved value-added tax special invoices were filled out according to the specific amounts and 6% tax rate agreed upon by both parties, clearly indicating "service fee" "promotion fee" and other transaction contents, belonging to filled-out invoices, rather than blank value-added tax special invoices. Suspect X also clearly confessed in the interrogation record that "the purchased ones were not blank invoices, but already issued value-added tax special invoices", which was consistent with the data of the involved invoices provided by the tax authorities. Therefore, the object of the involved behavior does not meet the objective requirements of the crime of illegally purchasing value-added tax special invoices, lacking the prerequisite basis for the establishment of this crime.

Further examination reveals that the statutory penalty for the crime of illegally selling or purchasing special VAT invoices is significantly more severe than that for illegally selling ordinary invoices. The fundamental reason for this lies in that this crime not only disrupts the order of invoice management but also directly threatens the core function of special VAT invoices - the tax deduction mechanism. Therefore, in interpretation, it requires that the perpetrator has the subjective intention of defrauding tax deductions and has objectively caused a loss of national tax revenue. In this case, the consideration paid by B's receiving company already includes a 6% VAT point, and the issuing company A has legally paid the corresponding VAT when issuing the invoices, and did not utilize the core function of the special VAT invoices to defraud national tax revenue, nor did it cause a substantive loss of national tax revenue. This is fundamentally different from the requirement of "defrauding tax revenue" which demands a loss of national tax revenue.

In March 2024, the "Two High" issued the "Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Tax Evasion" (Article 10, Paragraph 2), clearly limiting the crime of issuing fake special VAT invoices to cases where the perpetrator has the purpose of defrauding tax revenue. This reflects the judicial orientation of conducting substantive interpretation of tax-related crimes and preventing the expansion of the scope of crackdown. In accordance with this spirit, for acts of purchasing already filled-out special VAT invoices without the purpose of defrauding tax revenue and without causing a loss of VAT, it should not be simply classified as the crime of illegally purchasing special VAT invoices - otherwise, it would be inconsistent with the normative meaning of the interpretation that limits the crime of issuing fake invoices, resulting in a contradiction in evaluation such as "not defrauding tax revenue for the purpose of defrauding, but purchasing already filled-out special invoices constitutes a crime". This case precisely falls into this category - the object of the act is already filled-out special VAT invoices, the subjective intention is without the purpose of defrauding tax revenue, and the objective has not caused a substantive loss of VAT. From the objective aspect, it should not be classified as this crime.

Second layer: Distinguishing the nature of the act - paying is "service fee" rather than "ticket purchase fee"

In the face of the "hard evidence" of over 8.2 million yuan of funds flowing back, the defense team did not choose to evade but instead chose to "re-nature". From the perspective of the flow of funds, the consideration paid by B's receiving company to A's issuing company includes three parts:

(1) Salary payment amount (used to actually distribute wages to employees);

(2) 6% VAT (paid by A's issuing company legally);

(3) Invoice service fee (the income of A's issuing company and Mr. R, the upstream suspect).

Among them, the first part, "salary payment amount", through A's issuing company's flexible employment platform and the personal account of the upstream suspect Mr. R, ultimately flows back to the personal accounts of employees or shareholders, constituting the "funds flowback" in this case. However, this flowback is essentially the "fundual circulation of the salary payment", rather than the "consideration for issuing fake invoices". In other words, the consideration paid by B's receiving company is the comprehensive remuneration for the "salary payment + issuing fake invoices" package service, rather than the consideration for purchasing the invoices themselves. The existence of the funds flowback cannot be equated with the legal fact of "paying consideration for purchasing invoices". The payment and collection of the invoice fee focus on the exchange of the act of issuing fake VAT invoices itself, rather than the direct sale or purchase of the invoices themselves. The simple equivalence of the invoice fee to the price of invoice transactions ignores the substantive differences between the subjective intentions and objective behaviors of the perpetrator. In this case, the so-called "purchase" of invoices by the two parties involved is actually B's receiving company paying a fee to obtain the "behavior" of A's issuing company issuing fake VAT invoices for it. The nature of the two parties' actions is fundamentally different. Based on the statements of the suspect X, the fees paid by Company B to the ticket recipient were composed of "the amount of salary and dividends / the amount of dividends + 6% value-added tax point + invoice processing fee". These fees were compensation for the "salary distribution + fictitious invoice issuance" package service provided by the A invoice-issuing company, rather than the transaction price for the invoice itself. The composition of the fees and the return structure precisely confirm the previous judgment that "the payment was for services, not for the purchase price of the ticket".

Further examination reveals that the core purpose of Company B's action was to allocate costs and evade personal income tax and enterprise tax (i.e., the "tax evasion" purpose mentioned in the first layer of this argument), rather than the core purpose of purchasing invoices to "defraud VAT deductions", nor was it to obtain invoices for resale or secondary fictitious issuance. Since the payment was directed towards "services and actions" rather than "invoice goods", this case fundamentally differs from the behavior essence of the crime of illegally purchasing VAT special invoices, and cannot be simply determined as constituting this crime based on the invoice transaction price.

The third layer: The identification of subjective purpose - Tax Evasion

In tax-related crime defense, the key lies in distinguishing the true subjective purpose of the perpetrator.

In this case, the suspect X repeatedly stated in the interrogation transcript: His subjective purpose was "to save the company's employment tax and shareholder dividend tax", that is, to list costs through fictitious invoice issuance to evade personal income tax and enterprise tax, rather than the fundamental purpose of illegally purchasing invoices to "defraud VAT deductions". The defense believes that the purpose of the suspect X in providing the invoice processing fee was to evade tax payments, and the evasion of tax payments and illegal purchase of invoices belong to different subjective intentions, and cannot be simply determined as the suspect X constituting the crime of illegally purchasing VAT special invoices based on the objective behavior of "adding invoice processing fee and tax points". Specifically, the essence of illegally buying VAT special invoices lies in conducting transactions with the invoice as the subject matter and profiting from it, while in this case, the "tax points" collected by the invoice recipient cannot simply be equated with "profit". After paying VAT, enterprises also have to pay additional taxes, stamp duty, enterprise income tax, etc., and the "tax points" collected by the invoice recipient are mainly used to cover their own tax burden costs, rather than the profit from selling invoices. 2B invoice-recipient company transferred the employee salary plus invoice processing fee and tax points through the company's corporate account to the A invoice-issuing company by bank transfer. The nature of the above funds is closer to "salary distribution + comprehensive taxes + service fee", rather than the price for purchasing invoices.

Therefore, from the transaction structure perspective, this case lacks a transaction relationship based on the invoice as the subject matter, and the suspect X does not have the intention to purchase the invoice. Although the upstream invoice issuer has been determined to be guilty of illegally selling VAT special invoices, the subjective intentions of both parties in this case should still be separately determined. The conviction of the seller does not necessarily mean that the recipient will necessarily constitute the crime of illegal purchase. Whether the recipient has the purchase intention still needs to be independently judged based on their own behavior and purpose. The act of providing the invoice processing fee is essentially a means to evade tax payments: its purpose is to replace ordinary invoices with service fee VAT special invoices to list costs and reduce profits, thereby achieving the effect of evading personal income tax and enterprise tax. Therefore, even if the behavior of X is subject to criminal evaluation, it should first be classified as the crime of tax evasion, rather than directly characterized as the crime of illegally purchasing VAT special invoices.

The fourth layer: Progressive determination of crime - Even if characterized as "tax evasion", it does not constitute the crime of tax evasion

However, professional defense cannot stop here - if the procuratorate insists that the subjective purpose of X belongs to "tax evasion", and then pursues criminal responsibility for this crime, how should the defense work proceed? This leads to the "progressive" logic of this case's defense: even if we admit that the purpose is "tax evasion", the suspect X does not constitute the crime of tax evasion.

1. At the classification level: The Supreme People's Court publishes typical cases of tax evasion crimes

The defense attorney emphasized to the procuratorial authorities the key points of the judgment in the "Typical Cases of Punishing Crimes Against Tax Collection in Accordance with the Law" issued by the Supreme People's Court on November 24, 2025 (namely, the case of Guo and Liu evading taxes):

"For taxpayers who, within the scope of their tax obligations, use false additional items for deduction to pay less tax, even if they adopt the means of false invoicing for deduction, their subjective intention is still to evade or pay less taxes. According to the principle of unity of subjectivity and objectivity, they should be convicted of the crime of tax evasion."

-- "Typical Cases of Punishing Crimes Against Tax Collection in Accordance with the Law" by the Supreme People's Court (released in 2025)

In this case, the suspect X obtained service fee invoices issued by the supplier to list the costs, with the aim of paying less personal income tax and dividend tax. This falls within the "paying less tax within the scope of tax obligations". If convicted, it can only fall within the scope of the crime of tax evasion, and not the more serious crime of illegally purchasing or purchasing fake value-added tax special invoices or the crime of illegally issuing value-added tax special invoices. Thus, the focus of the case's classification has narrowed from "whether it constitutes a serious crime" to "whether it constitutes the crime of tax evasion", which is a milder and narrower issue.

2. Prosecution Level: Tax evasion is an "administrative offense". In this case, criminal prosecution was initiated without prior administrative procedures, which does not meet the conditions for filing a case.

The prosecution of tax evasion has a distinct "administrative pre-condition" attribute. Article 52 of the "Regulations on the Standards for立案 and Prosecution by Public Security Organs for Criminal Cases (II)" clearly states: One of the prerequisites for prosecuting taxpayers for evading tax payments is that "after the tax authority issues a notice for recovery， they fail to pay the due taxes， fail to pay the late fees， or refuse to accept administrative penalties"， or if they have been convicted of tax evasion in the past five years and have been subject to two or more administrative penalties by the tax authority before evading taxes again.

However， the suspect X and the purchasing company B in this case never received a notice for recovery issued by the tax authority， nor did they receive two or more administrative penalties. In other words， before the investigation authority directly initiated criminal prosecution， this case did not undergo the administrative pre-condition required for tax evasion， such as "tax authority investigation - order to make up the payment - refusal to comply"， and the case did not meet the conditions for filing a tax evasion case. Suspect X does not constitute tax evasion.

04 Final Result： Release on Bail， No Transfer for Review and Prosecution

From the time the suspect X was taken into compulsory measures in early October 2024 to the official decision by a certain district People's Procuratorate to release on bail in July 2026， a total of 657 days passed. During this nearly two-year drawn-out battle， the case went through two returns for supplementary investigation during the review and prosecution stage. Each time the case files were returned， the defense team seized the opportunity to submit and update defense opinions， and engaged in continuous communication and repeated negotiations with the handling prosecutor on the case's nature. It was precisely the professional dedication and unwavering stance at each procedural node that led the procuratorial organ to make the decision to release on bail and no longer transfer for review and prosecution.

Conclusion

Looking back on the entire case， from the initial filing by the public security authority as suspected of illegally purchasing value-added tax special invoices to the final termination of the prosecution procedure by the procuratorial organ in accordance with the law， every turn of the case's development fully demonstrates the core value of professional defense in safeguarding the legitimate rights and interests of the suspect and preventing wrongful convictions. The life of the law lies not only in experience and logic， but also in the careful consideration of facts and evidence in each specific case. The proper resolution of this case not only effectively protects the legitimate rights and interests of suspect X but also vividly demonstrates the implementation of the "lenient and strict combination" criminal policy and the "protection of the legitimate rights and interests of private entrepreneurs" judicial orientation. Thus， this 657-day defense battle is successfully concluded.

Footnote：

1. Tong Huijun， Zhou Yuhui， Chen Ying. "Research on the Behavior of Issuing Value-Added Tax Special Invoices for the Purpose of Deceiving Tax Payments" [J]. China Prosecutor， 2025， (16)： 23-27.

2. Ren Suxian： "Can Cases Not Classified as Tax Evasion Crimes be Charged as Illegal Trading of Value-Added Tax Special Invoices?"， published on the "Legal Thoughts | Jiangnan Legal Innovation Research" public account on March 19， 2025.