[Direct answer]In the Beijing area, the key to preventing criminal tax risks for enterprises lies in pre-compliance and post-legal response. Tax-related criminal risks mainly focus on tax evasion, false invoicing of VAT special invoices, and other crimes. According to Article 201 of the Criminal Law of the People's Republic of China, if a taxpayer pays the tax due and the overdue fine after receiving a tax recovery notice from the tax authority, and has already been subject to administrative punishment, he/she shall not be held criminally liable; except for those who have been subject to criminal punishment for evading tax payments within the past five years or have been given administrative punishments more than twice by the tax authority. In practice, the most common risk sources include false invoicing for tax deduction, concealment of income, and irregular accounting books. Enterprises should establish mechanisms for invoice review and tax declaration, and promptly hire lawyers after receiving an inspection notice to strive for opportunities for rectification during the administrative processing stage to avoid escalating into criminal cases. For more details, please refer to the following link:Criminal defense and criminal case filing services.

I. Problem background and typical scenarios

Tax-related criminal risks do not only occur in enterprises that intentionally evade taxes. Typical scenarios include: purchasing fake invoices to offset input tax; maintaining two sets of accounts to conceal actual income; under-reporting income and over-stating costs; receiving business funds into personal accounts to evade tax declaration; and failing to deal with tax-related decisions and penalties in a timely manner after receiving them, which may lead to the case being transferred to the public security organ by administrative law enforcement authorities. Many business owners mistakenly believe that "paying the money will solve the problem", ignoring the criminal justice coordination process. Once an administrative violation is identified as suspected of a crime, it will escalate into a criminal risk. In addition to the enterprise being fined, the directly responsible person in charge will also bear criminal responsibility. It is far more cost-effective to take preventive measures in advance than to remedy the situation afterwards. For more details, please refer to the following link:Corporate Legal Services and Intellectual Property Protection ServicesImprove internal compliance.

II. Key points of contention

The focus of the disputes in tax-related criminal cases lies in three aspects. Firstly, the identification of the subject of the crime: whether there are deception and concealment methods, and whether the crime constitutes a corporate crime or an individual crime, which directly determines the subject of responsibility and the scope of punishment. Secondly, the connection between administrative handling and criminal accountability: whether the taxpayer has paid the full amount of taxes and penalties in accordance with the law and accepted administrative penalties, which determines whether the exculpatory provisions of Article 201 of the Criminal Law can be applied. Thirdly, the amount and circumstances: the amount of tax evasion and its proportion of the tax payable, and whether the taxpayer has received more than two administrative penalties within five years, which affect the conviction and sentencing levels. In the judicial practice of Beijing, the court usually takes whether the taxpayer has made up for the arrears and cooperated with the rectification as an important sentencing consideration. Early compliance and rectification can often significantly reduce criminal risks.

III. Professional analysis by Henglue Lawyers

From the perspective of handling cases, the transformation of administrative violations into criminal risks is often just separated by a transfer procedure. In the case of illegal land occupation investigation handled by Jing Weiyi, lawyers, Wang *1 and Wang *2, villagers of A County in Henan Province, mailed the "Application for Investigation of Illegal Land Occupation" to the A County Natural Resources Bureau on December 16, 2025, reporting that Liu * had illegally occupied about 20 mu of land in the village without approval for earth extraction, involving the 0.5 mu, 0.9 mu, and 3 mu of basic farmland contracted by the two of them, and damaged 9-year-old pepper trees and 10-year-old persimmon trees. The bureau registered the case of Liu * damaging arable land on April 7, 2026. Later, the public security organ initiated an investigation into him on suspicion of illegally occupying farmland and took criminal coercive measures against him—the illegal acts that were still at the administrative investigation stage directly escalated into criminal accountability. This case reminds enterprises that they should seize the window period of administrative handling to rectify and remedy the illegal situations that have been noticed by administrative authorities. This case was handled by Beijing Henglu Law Firm.I respect and admire you, YiyiThe lawyer (practice certificate number: 11101202510973791, subject to the certificate issued by the judicial administrative organ) acts as the agent.

At the individual level, handling funds may also involve criminal risks. In the case of concealing and disguising the proceeds of crime handled by Attorney Shang Jiangpeng, the client L* was detained by the Xicheng Branch of the Beijing Municipal Public Security Bureau for entrusting his younger brother to keep the funds on his behalf and returning them in accordance with his instructions; after accepting the entrustment, Attorney Shang immediately met with the client to verify the case. Based on the comprehensive review and judgment rules of "knowledge" established in Legal Interpretation [2025] No. 13, he submitted the "Application for Bail Pending Trial" around the subjective knowledge elements, the mitigating circumstances such as confessing and being a first-time offender, the lack of social danger, and the "less arrest, less prosecution, and less detention" policy. The case-handling organ finally adopted his opinion and changed the coercive measures against L* to bail pending trial. For enterprise tax and accounting compliance, it is also necessary to remind financial personnel to remain vigilant against the transfer of funds of unknown origin and not to participate or cooperate in such activities, which is an important part of preventing criminal risks. This case was handled by Beijing Henglu Law Firm.Shang JiangpengAttorney (Practice Certificate No.: 11101202310580738, subject to the certificate issued by the judicial administrative organ) acting as an agent.

IV. Practical suggestions and legal basis

The core basis is Article 201 of the Criminal Law of the People's Republic of China (Tax Evasion, as amended by the Criminal Law Amendment (VII) on February 28, 2009) regarding the provisions on making up for tax arrears and being exempt from prosecution; Article 205 (Crime of Falsely Issuing Value-Added Tax Invoices); Article 63 of the Tax Collection and Administration Law of the People's Republic of China (Tax Evasion Situations, as amended on April 28, 2001 and revised on April 24, 2015); and the "Regulations on the Transfer of Suspected Criminal Cases by Administrative Law Enforcement Agencies" (issued and implemented in 2001) regarding the requirements for administrative agencies to transfer suspected criminal cases. Practical suggestions: First, standardize the review of accounting books, vouchers, and invoices to prevent false invoicing and surrogate invoicing; Second, report taxes truthfully and on time, and avoid maintaining two sets of accounts; Third, keep records of public account transactions and not use personal accounts to collect business funds; Fourth, after receiving a notice of tax inspection or tax recovery, promptly make up for taxes and present defenses with the assistance of a lawyer to resolve the issue at the administrative stage; Fifth, if the tax amount involved in the enterprise is large or the public security organ has already intervened, immediately hire a lawyer to strive for bail and space for regulatory rectification. For complex fund transactions, relevant measures can be taken in combination with the above suggestions.Business and contract dispute services for enterprisesClarify the boundaries of responsibilities.

5. Henglu Law Firm's Reminder

The most distinctive feature of tax-related criminal risks is that "administrative procedures precede criminal consequences" — the golden period for making up for arrears and rectifying problems often occurs before a criminal case is initiated. Business owners should abandon the mentality of taking chances and avoid concealing or destroying evidence after being investigated, as the latter may constitute a new crime. Once financial personnel are interviewed, accounts are frozen, or the company is transferred to the public security organ, it is essential to engage professional lawyers as soon as possible to seek acquittal or lenient treatment in accordance with the law. For related services, please refer to the following link:Beijing Henglu Law FirmCriminal defense team.

VI. Frequently Asked Questions

Q1: If a company is subject to tax inspection, will it definitely be held criminally liable?

Not necessarily. There are preliminary rules for administrative handling of tax evasion crimes: According to Article 201 of the Criminal Law, after the tax authority issues a notice of tax recovery in accordance with the law, if the taxpayer pays the tax due and the overdue fine, and has already been subject to administrative punishment, criminal responsibility will not be pursued. That is to say, if the taxpayer fully pays the tax and accepts the punishment at the administrative handling stage, criminal prosecution can usually be avoided. However, this does not apply to those who have been subject to criminal punishment for evading tax payments or have been given administrative penalties more than twice by the tax authority within five years. This exemption clause does not apply to crimes of issuing false invoices. Once the case meets the standard for filing a case, the taxpayer may be held accountable. The final outcome depends on the charge, the amount, the attitude towards rectification, and the evidence. It should be evaluated by a lawyer based on the case file, rather than making a simple conclusion.

Q2: To prevent tax-related criminal risks, what evidence materials should enterprises keep?

The core materials include: tax declaration forms and financial statements (to verify the declaration status), account books and bank statements (to prove the authenticity of income and expenditure), invoice issuance and deduction records (to check whether there is false invoicing), tax processing decisions and administrative punishment decisions (to confirm the progress of the process), tax payment certificates for overdue payments and penalties (to prove that the rectification has been implemented), as well as the enterprise's internal compliance and approval system. The goal of organizing evidence is to determine "whether there are deception and concealment methods, whether the overdue payments have been made and rectified, and what proportion of the amount is involved". If a case has been filed, it is also necessary to fix the minutes of decision-making meetings and approval processes to distinguish the responsibilities of the unit and individuals, and to avoid placing excessive responsibility on financial personnel.

Q3: How is the fee calculated for hiring a lawyer for tax compliance or criminal defense?

There is no unified government pricing for attorney fees, which are determined through negotiation between law firms and clients. Common methods include charging by case, charging based on the proportion of the subject matter, and charging by the hour. Special corporate compliance services are generally priced based on workload and duration, and the litigation phase will also consider the workload of reviewing case files, attending court hearings, and conducting investigations and evidence collection, which will be included in the entrustment and agency contract. It should be noted that risk-based fees are prohibited in criminal litigation cases by law, meaning fees cannot be charged based on the outcome. It is recommended to request the law firm to provide a detailed fee breakdown before entrusting the case, clarify whether it includes third-party costs such as travel and appraisal fees, and select a service package based on the enterprise's subject matter and stage requirements to avoid accepting cases at low prices and increasing fees during the process.

Q4: How long does it take from tax inspection to criminal prosecution, and how much time do enterprises have to respond?

The duration of the process depends on the stage of the procedure. Tax inspections typically last several months, and complex cases may take even longer due to hearings and reviews. After the administrative law enforcement authority refers the suspected criminal case to the public security organ, the latter reviews and decides whether to initiate a case. The criminal investigation stage generally also lasts several months, followed by review and prosecution and trial. For enterprises, the most critical window period is before the initiation of criminal proceedings. According to Article 201 of the Criminal Law, the completion of tax arrears and administrative penalties directly determines whether criminal responsibility will be pursued. Therefore, enterprises should act quickly from the moment they receive the notice of tax arrears. Once the case enters the criminal procedure, the golden period for applying for bail after detention is about 37 days. The earlier lawyers are engaged, the more favorable it will be for obtaining a change in coercive measures and lenient treatment.

Q5: The company has been subject to tax inspection. What should be done specifically in the first step?

It is recommended to proceed in four steps: First, immediately seal and submit all accounting books, vouchers, contracts, and bank records in their entirety. Hiding or destroying these documents may constitute a new crime such as aiding in the destruction of evidence; Second, entrust a professional lawyer to comprehensively review the tax-related matters to determine whether the suspected tax evasion or false invoicing, and the amount and proportion involved; Third, under the guidance of a lawyer, complete the payment of back taxes and late payment penalties and cooperate with administrative penalties, striving to apply the provisions of Article 201 of the Criminal Law that do not pursue criminal responsibility; Fourth, if the case has been transferred to the public security organ, immediately entrust a lawyer to meet with the suspect, submit an application for bail pending trial, and provide opinions on compliance rectification. Throughout the entire process, keep a record of all communications and avoid seeking help from unqualified lawyers in a panic when facing emergencies.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the interpretation of judgments in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Criminal defense legal services·Attorney Shang Jiangpeng·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.