After the implementation of the Provisions on the Submission of Tax related Information by Internet Platform Enterprises, in October this year, all major platforms reported the third quarter sales data of businesses on the platform to the tax authorities according to law. If the tax authority finds any abnormality through big data comparison, it will push the information to the merchants. The general content is: "The value-added tax income declared by the merchants in the third quarter is less than the amount of income reported by the Internet platform enterprises to the tax authority. If it is a declaration error, the merchants should correct it in time." The main reasons for the data abnormality are: 1. The merchants deliberately less declare; 2. The merchant declared truthfully and the platform did not exclude the data of "brushing orders".

If merchants intentionally underreport, timely correction of the declaration can avoid serious tax risks; But should the "false sales revenue" caused by "brushing orders" also be corrected for declaration and payment of taxes? This article explores the issue as follows.

1、 The concept of "brushing orders" and the "brushing order process"

Brushing orders "is a typical form of false advertising and unfair competition." Merchants "and" brushing hands "fabricate transactions, fabricate false user reviews, and artificially enhance the reputation and sales of merchants on e-commerce platforms.

In recent years, with the rapid development of e-commerce economy, "brushing orders" has formed an industrial chain. The specific process is as follows:

The first step is for merchants or brushing groups to recruit "brushing hands" (fake buyers) through social media platforms, group chats, and other channels, usually using commissions, cashback, or gift giving as bait.

The second step is to brush hands and search for the target product according to instructions, which requires browsing multiple stores to imitate real user behavior.

Step three, fraudulent transactions and payments. Make payment through brushing orders, and the funds will be returned by the merchant through third-party transfer to ensure no actual losses during brushing.

The fourth step is for merchants to send empty packages or low-priced small gifts, generate real logistics tracking numbers to avoid platform supervision, and "brush hands" to make false customer reviews after receiving the goods.

2、 Platform enterprises are not allowed to exclude revenue from "brushing orders" when submitting information

According to the overview of the "brushing process" above, it can be seen that the "sales volume" increased by brushing behavior belongs to false sales volume. There is no real transaction between the merchant and "brush hands" regarding the product, and the merchant not only does not generate any sales revenue, but also needs to pay small gifts and commissions to the brush hands. So, if the platform is aware of the brushing data, can it proactively remove it for merchants when submitting information to the tax authorities?

The State Administration of Taxation made it clear in its "FAQ on the submission of tax related information of Internet platform enterprises" that "platform enterprises should submit the income information of operators in the platform in accordance with the regulations, and should not eliminate the so-called" swiping "income. ”That is to say, when the platform submits, it must submit according to the merchant sales data displayed on the platform.

However, it should be noted that merchants are not required to include "brushing" income in their sales revenue and fulfill their tax obligations. The author believes that although the platform needs to declare in full, merchants have the right to prove the existence of "brushing" behavior to the tax authorities and exclude "brushing" data from the declaration data.

3、 Does' brushing orders' generate tax obligations

1、 Value added tax

Article 1 of the Provisional Regulations on Value Added Tax stipulates that "Units and individuals who sell goods, process, repair and maintenance services (hereinafter referred to as services), sell services, intangible assets, real estate, and import goods within the territory of the People's Republic of China shall be taxpayers of value-added tax and shall pay value-added tax in accordance with this Regulation

Value added tax, as a turnover tax based on the value-added generated during the circulation of goods, is subject to the premise of the existence of real transaction behavior and the circulation of goods for the purpose of tax obligations. In the fictional transaction of "brushing orders", there is no basis for value-added tax due to the lack of logistics transfer.

2、 Income tax

Article 1, Paragraph 1 of the Enterprise Income Tax Law stipulates that "within the territory of the People's Republic of China, enterprises and other organizations that obtain income (hereinafter referred to as enterprises) are taxpayers of enterprise income tax and shall pay enterprise income tax in accordance with the provisions of this Law." Article 6 stipulates that "the income obtained by an enterprise from various sources in monetary and non monetary forms shall be the total income, including: (1) income from the sale of goods;..." Article 14 of the Implementation Regulations of the Enterprise Income Tax Law stipulates that "the income from the sale of goods referred to in Article 6, Item (1) of the Enterprise Income Tax Law refers to the income obtained by an enterprise from the sale of goods, products, raw materials, packaging materials, low value consumables, and other inventory. Article 4 of the Guidelines on Revenue specifies that, The time when a company recognizes revenue is when the control of the goods is transferred

Based on the above regulations, we have come to the following conclusion: firstly, enterprises have a tax obligation to pay corporate income tax after obtaining income; Secondly, enterprises should "recognize revenue" when control of goods is transferred. So, since "brushing orders" is a false business transaction and the control of the goods involved has not been transferred, the enterprise does not need to recognize income and naturally has no obligation to pay corporate income tax.

4、 Risk control and compliance recommendations

1、 Merchants should eliminate brushing behavior

The act of "brushing orders" itself violates business ethics and relevant laws and regulations (such as the Anti Unfair Competition Law, the E-commerce Law, etc.), infringes on consumer rights, and merchants should put an end to this behavior.

2、 Provide information to the tax authorities to prove that there is no real transaction substance

For the swiping problem exposed by the submission of tax related information on the Internet platform, the enterprise should actively communicate with the tax authorities, provide the order number of the swiping, logistics information (to prove the low value small gifts or empty packages delivered), swiping payment records, bank flow of funds returned for swiping, relevant chat records, etc., to prove the swiping behavior, strive to eliminate this part of the data from the sales amount, and reduce tax risk.

※ Note: Due to the "brushing" behavior, the merchant did not issue a value-added tax invoice to the brushing agent, so there is no administrative responsibility for false issuance.