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.

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.