On July 23, the Ministry of Commerce of PRC issued the third batch of 31 “Best Practice Examples” of the free trade pilot zones. The fault-tolerant and lacking-tolerant reform examples of tax-related law enforcement was selected in it, which was explored and implemented by Yichang Free Trade Zone(FTZ) Administration Committee and the Yichang Tax Bureau.

　　Before the implementation of the mechanism, the taxpayer's application materials for business must be complete and meet the relevant requirements, otherwise it will not be accepted. If there is a wrongful behavior such as non-subjective intentional tax evasions, there will be no appeal opportunities and corresponding legal responsibilities. In serious cases, taxpayers will receive the credit rating downgrade and blacklisting penalties.

　　In order to maximize the tax loosening of taxpayers, since last July, the Yichang FTZ Administration Committee and the Yichang Tax Bureau have jointly carried out tax-related law enforcement and tolerance reform. Lacking tolerance means that the tax authorities will first handle the tax-related business after the examination as long as the key information is correct and not missing, and then the taxpayer can complete the information afterwards. Fault tolerance, that is taxpayers may enjoy fault-tolerant treatment because of some situations, such as unclear definition of tax policy, tax policy adjustment, unexpected events, force majeure and negligent behavior.

　　In this case, the tax authorities come to help taxpayers correct their mistakes. In law enforcement, more warnings, reminders, tax assessments are used to help taxpayers timely correct mistakes and minimize tax-related risks.In terms of management, there is no negative evaluation of taxpayers' eligible tax management matters.

　　Last September, Yichang tax department inspected a technology company, finding that a small number of papers obtained from customers outside Hubei Province were not in compliance, resulting in less tax payment of more than 290,000 yuan. After in-depth investigation, the department made it clear that this situation was caused by the other party’s deception which is a non-subjective intent. Subsequently, the tax department initiated a fault-tolerant mechanism to minimize the loss of corporate business reputation on the premise of making up the tax.

　　At the same time, the mechanism carefully used “lacking tolerance and fault tolerance” for matters with high risks, especially for those taxpayers whose tax credit evaluation results are Level C or Level D, aiming at protecting the honest and disciplining the offenders.

　　It is reported that since the implementation of tax-related law enforcement tolerance mechanism in Yichang FTZ, it has handled 131 fault-tolerant faults for taxpayers, avoiding direct tax risks by 11.15 million yuan and reducing tax losses by 6.28 million yuan.(Reporter: Gao Wei; Correspondent: Zhou Tingting)