The fourth phase of China's Golden Tax Project has been officially launched at the end of 2021. It will incorporate "non-tax" business into the construction of the project, while building a channel for information sharing and verification between participating institutions such as ministries and commissions, the People's Bank of China, and banks, which will realize the three functions of mobile phone number of relevant personnel of the enterprise, the tax status of the enterprise, and the verification of the registration information of the enterprise. The fourth phase of the Golden Tax Project will promote the tax collection and management from "controlling taxes by votes" to "governing taxes by numbers” and realize the comprehensive monitoring of the business processes of the tax system.

With the launch of the fourth phase of Golden Tax, the state's supervision of corporate finance and tax compliance is bound to become more and more stringent. Enterprises should enter the period of financial compliance transformation as soon as possible, standardize accounting and pay taxes according to law. Under the golden tax phase IV, some of the risk points those enterprises should pay attention to are as follows:

1. Insufficiency or non-payment on social insurance
   Situations when enterprises pay insufficient amount or reject to pay social insurance including employees abandon social insurance voluntarily, reject to pay social insurance for employees during probation, paying social insurance on the lowest base rather than employee’s actual salary.
   
   
2. The name of the project for which the enterprise issues invoices are      seriously inconsistent with its actual business scope.
   
   
3. The enterprise has not filed a tax exemption or a simplified tax but has declared tax-free sales or simple tax-calculated sales.
   
   
4. Commercial and trading enterprises have serious divergences between import and sales, such as purchasing many metals raw materials, but the name of the sales goods filled in when issuing invoices is clothing.
   
   
5. Enterprises sell similar goods but fill in the unit price when issuing invoices fluctuate greatly.
   
   
6. The enterprise has lots of invoices for office supplies without a list, or there are many invoices with the title of abnormal expenses for individuals.
   
   
7. Enterprises only have output but no input, or only input but never output, and the VAT burden is abnormally high or low.
   
   
8. Newly established companies frequently apply for invoice increments, or sharply increase the number of invoices issued in the short term.
   
   
9. Since its opening, the enterprise has been reporting zero declarations for a long time or losing money for many years, resulting in abnormal corporate income tax rates.
   
   
10. The amount of the current account of the enterprise is too large.
    
    
11. The profit data on the corporate income tax return is inconsistent with the data in the financial statements submitted, or the sales on the income tax return are inconsistent with the sales in the VAT return.
    
    
12. The expense ratio during the enterprise period is unusually high.
    
    
13. Enterprises have a lot of "conference fees", "consulting fees", "service fees", "training fees" and other expenses, but only invoices and no relevant supporting documents.
    
    
14. There are abundant of cash transactions in businesses, rather than through corporate accounts.
    
    
15. The total of salary is not accordant with the one for reported Enterprise Income Tax and Individual Income Tax.

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advice and services in respect of the formation and registration of company, application for various business licences and permits,  any compliance, tax planning, audit, and accounting in China. Please call and talk to our professional consultants for details.