In the era of tax information technology, tax inspections based on big data analysis are already quite common, while inspections arising from reporting are usually a lesser probability. But according to some firms, the frequency of inspections caused by tax reporting has increased significantly compared to previous years.
In this article, the author shares his experiences in dealing with such tax inspections.
(1) Reported by internal employees. This frequent type of reporting is often provoked by disgruntled internal employees reporting tax violations to authorities with information they have due to dissatisfaction over promotions or adjustment of work positions and workplaces.
(2) Reported by professional whistleblowers for rewards. According to article 6 of the Interim Measures for Rewarding Taxpayers for Reporting Tax Violations, the maximum bonus for a whistleblower can be up to RMB100,000 (USD14,300) upon taxation authorities investigating and verifying tax violations, and collecting taxes according to the law.
(3) Reported by competitors. As an example, Zhejiang Semir Garment was reported for tax evasion before listing in 2011 by a departing employee, but the company chairman claimed a rival orchestrated the reporting. This type of reporting is very likely to occur in the pre-listing or listing period, which may lead to failure of the proposed listing and damaged reputation of the listed company.
(4) Reporting triggered by economic disputes. If an...
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