The previous article of this topic systematically explained the authenticity of expense reimbursements and results, as well as the definition and nature of "falsely invoicing behaviors" within Hidden Tax Risks in Employee Expense Reimbursement. This article will focus on the tax treatment of falsely invoicing behaviors.

A large number of employee reimbursements occur in the daily operation of enterprises where there are many hidden risks which cover a wide range, including risks in labor, commercial bribery, taxation and etc. It is of vital importance for enterprises to prevent and identify various risks in reimbursements. This article mainly discusses tax issues in employees’ reimbursements.

On April 29, 2024, the People's Bank of China and the State Administration for Market Regulation jointly issued the Measures for the Administration of Beneficial Ownership Information (the Measures), which will take effect on November 1, 2024. According to the Measures, beneficial ownership is statutory record information and must be filed with the registration authority. The People's Bank of China also concurrently released the Beneficial Ownership Information Filing Guidelines (First Edition) to provide further regulatory requirements on the disclosure (filing) of beneficial ownership information. The concept of beneficial ownership is primarily focused in the financial sector. To improve the anti-money laundering, anti-terrorist financing, and anti-tax evasion regulatory systems, the People's Bank of China requires financial institutions to strengthen customer identity verification. For example, before the implementation of the Measures, a company was primarily required to disclose beneficial ownership information when applying to open an account or change shareholders with a bank. After the implementation of the Measures, the company is required to file beneficial ownership information with the market regulatory authority when registering or updating its establishment or changes. The beneficial ownership must be traced down to the ultimate natural person shareholder, and the specific information to be disclosed includes name, gender, nationality, date of birth, habitual residence or work unit, identity document, and the type of beneficial ownership relationship as well as related dates, etc.