CRS is mainly aimed at the tax payment of overseas income of tax residents in a country (region). Judging from the actual situation in China, at present, some financial assets, such as deposits in stock financial accounts under the names of overseas individuals, have left the country illegally through borrowing, false trade and false investment, and have not paid taxes in accordance with the relevant tax laws and regulations of China, so they are legally in a state of "should be declared but not declared".
with the implementation of CRS in China in September 218, the tax-related information of overseas financial accounts of China tax residents will be fed back to China tax authorities, and these "unpaid income" will face legal consequences such as tax payment. This is the primary risk faced by high net worth individuals in China in the tax-related information exchange of global financial accounts. An actual case that has been disclosed explains the legal risk of this illegal transfer of assets.
through the representative office of China in the International Joint Anti-Tax Avoidance Center, the State Taxation Bureau of China submitted a request for assistance to State Taxation Administration of The People's Republic of China, China, hoping that the Chinese side would provide the income and tax payment of China immigrants X and L in China, and suspected that these two people had not truthfully declared their property and income in China, which was suspected of tax avoidance. The couple, originally from Zhongshan City, Guangdong Province, immigrated to Country C in December 28, where they have been paying taxes according to their low income. After receiving the task, Zhongshan Local Taxation Bureau immediately set up a task force to conduct a comprehensive investigation on the entry and exit, asset purchase, ownership of equity and capital flow of X and L couples, and at the same time check whether there are any tax-related violations in China. By screening the transaction records of bank accounts under the names of the persons involved and their relatives provided by 19 banking institutions in the city, it is determined that X's mother is the actual investor of enterprise A, and enterprise A often transfers a large sum of money to X's mother, and X's mother takes the production and business income of its hidden shareholding enterprise for a long time on the grounds of borrowing, and then gradually transfers the domestic investment income to country C through the Hong Kong bank accounts of several family members. In the end, Zhongshan Local Taxation Bureau required enterprise A to withhold and pay X's mother's personal income tax of 34,743,7 yuan according to the project of "interest, dividend and bonus income".
It is very dangerous to conceal the identity of tax residents by purchasing passports
With the approach of CRS, various tax planning schemes are coming one after another. However, we must face up to the fact that CRS is fundamentally a serious legal issue. If the planning scheme is improper, there will be legal risks that cannot be underestimated.
according to the rules, the determination of tax resident status is the premise of financial account information exchange between countries (regions), so as to determine the object of information collection and exchange, and finally transfer the qualified financial account name, taxpayer identification number, address, account number, balance, interest, dividend and income from selling financial assets to the tax resident country (region) in the legal sense of the natural person through exchange. Recently, in order to avoid being collected and exchanged the tax-related information of their overseas financial accounts, some individuals tried to hide their identity as tax residents in China by purchasing passports from other countries, so as to avoid paying taxes. This has great legal risks.
Tax resident status is the basic basis for a country to carry out cross-border tax collection and management, and its standard is determined according to domestic laws of various countries, not passport or nationality. For example, Article 1 of China's Individual Income Tax Law clearly stipulates that individuals who have a domicile in China or have no domicile but have lived in China for one year shall pay individual income tax in accordance with the provisions of this Law on income obtained from inside and outside China. It can be seen that in the identification of tax residents, China has adopted the residence standard and the residence time standard. Therefore, it is impossible to change China's tax resident status simply by purchasing a country's passport.
according to article 21 of China's current criminal law, taxpayers who make false tax returns or fail to declare by deception or concealment, and evade paying a large amount of tax, accounting for more than 1% of the tax payable, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined; If the amount is huge and accounts for more than 3% of the tax payable, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. Therefore, it is likely to violate the crime of tax evasion stipulated in China's criminal law by hiding the identity of tax residents by buying passports and not declaring taxes.
Failure to declare and pay taxes according to law after p>CRS landed faces serious legal consequences
In the past, some individuals took advantage of the information barriers between different countries and regions to boldly conceal their overseas income, did not declare and pay taxes to the competent domestic tax authorities, and evaded their tax payment obligations. After the implementation of CRS, this practice will not work, because with the exchange of tax-related information in global financial accounts, the competent tax authorities in China will truly grasp the tax-related information of overseas accounts of China tax residents. In this case, if the relevant tax residents refuse to file tax returns or make false tax returns, they will face serious legal consequences.
Article 9 of China's individual income tax law clearly stipulates the tax obligation of resident taxpayers for their overseas income, that is, taxpayers who obtain income from outside China shall pay the tax due to them into the state treasury within 3 days after the end of the year and submit a tax return to the tax authorities. If you don't comply, you will face punishment.
article 63 of the tax administration law stipulates that a taxpayer who forges, alters, conceals or destroys account books and vouchers without authorization, or lists expenses in account books or omits or omits income, or refuses to declare or makes false tax returns after being notified by the tax authorities, or fails to pay or underpays the tax payable, is tax evasion. If a taxpayer evades taxes, the tax authorities shall recover the taxes and late fees that he fails to pay or underpays, and impose a fine of not less than 5% but not more than five times the taxes that he fails to pay or underpays; If a crime is constituted, criminal responsibility shall be investigated according to law.
article 32 of this law stipulates that if the taxpayer fails to pay the tax within the prescribed time limit and the withholding agent fails to pay the tax within the prescribed time limit, the tax authorities shall, in addition to ordering the tax payment within the prescribed time limit, impose a late payment fee of .5% of the overdue tax on a daily basis from the date when the tax payment is overdue.
the tax law also clearly stipulates that there is no subjective intention to underpay taxes. According to the relevant regulations, if taxpayers and withholding agents fail to pay or underpay the tax due to the responsibility of the tax authorities, the tax authorities may require taxpayers and withholding agents to pay back the tax within three years, but no late fees shall be charged. If the taxpayer or withholding agent fails to pay or underpays the tax due to miscalculation and other mistakes, the tax authorities may pursue the tax payment and overdue fine within three years; Under special circumstances, the period of conscription can be extended to five years. For tax evasion, tax refusal and tax fraud, the tax authorities shall pursue the unpaid or underpaid taxes, late fees or tax fraud, and shall not be limited by the time limit specified in the preceding paragraph.
"There are only two things in the world that are inevitable, death and tax payment". For Franklin's famous saying, if high-net-worth individuals in China used to feel vague, then with the implementation of new systems such as CRS and natural person taxpayer identification number, the experience may become true. (from the tax newspaper)