On June 27, 2025, the Ministry of Finance, State Taxation Administration, and Ministry of Commerce jointly released Announcement [2025] No.2, titled "Announcement on Tax Credit Policy for Foreign Investors Using Distributed Profits for Direct Investments". Shortly thereafter, on July 31, 2025, the State Taxation Administration released Supporting Announcement No.18. These policies aim to strongly encourage foreign investors to reinvest profits earned in China back into the Chinese market. This combined policy signals the Chinese government’s clear commitment to stabilizing foreign investment and stimulating reinvestment.

In recent years, we have frequently encountered investigations of employee misconduct such as commercial bribery and embezzlement. Due to the clandestine nature of such misconduct, companies often struggle to independently obtain critical evidence of these violations, for instance relevant bank transfer records. Under current judicial practice, the lack of such evidence places companies at a significant disadvantage, whether in pursuing criminal complaints, civil claims, or employment termination.

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.