China Certified Tax Adviser - Tax-Related Service Law common mistakes
China Certified Tax Adviser - Tax-Related Service Law · Understand the traps and how to avoid them.
When a taxpayer disputes a specific tax administrative act, candidates file a civil lawsuit in the people's court or apply directly for administrative litigation without first applying for administrative reconsideration, treating the tax dispute as an ordinary administrative case. In fact, tax disputes over tax payment fall under the reconsideration前置 (reconsideration-first) rule: the taxpayer must first pay or provide a guarantee for the tax and late fees, then apply to the higher tax authority for administrative reconsideration, and only if dissatisfied with the reconsideration decision may they sue.
Candidates confuse the general rule of 'choose reconsideration or litigation' under the Administrative Reconsideration Law with the special rule under Article 88 of the Tax Administration Law, and they overlook the precondition of 'paying tax or providing a guarantee' before reconsideration. Many candidates also fail to distinguish 'tax payment disputes' from 'penalty and enforcement disputes', and mistakenly apply reconsideration-first to penalty decisions that are not subject to it.
What to do instead
Create a two-column comparison table: in the first column, list 'tax payment disputes (reconsideration-first + tax payment or guarantee precondition)'; in the second, list 'penalties, enforcement measures, and tax preservation disputes (reconsideration or litigation at choice)'. Memorize Article 88 of the Tax Administration Law and the Administrative Reconsideration Law provisions on reconsideration-first. For each practice question, first identify the nature of the disputed act, then determine the remedy path. Practice writing out the full sequence of steps: 'pay tax/provide guarantee → reconsideration within 60 days → litigation within 15 days after receiving the reconsideration decision'.
When analyzing corporate personality and shareholder liability, candidates mechanically apply 'limited liability' and conclude that shareholders are not liable for company debts, ignoring the disregard of corporate personality (piercing the corporate veil) and the special rules for single-shareholder companies and for shareholders who have not fully paid their capital contributions. In particular, they fail to apply the rule that a single-member limited liability company's shareholder bears the burden of proving that company property is independent of personal property.
Candidates treat 'limited liability' as an absolute principle and do not internalize the exceptions under Article 23 of the Company Law and the judicial interpretations on capital contribution. They also confuse the burden of proof: in ordinary companies, the creditor bears the burden of proving abuse of corporate personality; in single-shareholder companies, the burden is reversed onto the shareholder.
What to do instead
Memorize three tiers: (1) general rule: shareholders are liable to the extent of their subscribed capital contribution; (2) piercing the veil: shareholders who abuse corporate personality to evade debts and seriously harm creditor interests bear joint and several liability, with the creditor bearing the burden of proof; (3) single-shareholder company: the shareholder bears the burden of proving asset independence, and if unable to prove it, bears joint and several liability. Also review the accelerated maturity of capital contributions and the liability of transferring shareholders for equity transfers where contribution was not yet due. Practice with fact patterns that vary the number of shareholders and the capital contribution status.
When handling security interests, candidates fail to distinguish the establishment requirements of different types of security and the scope of their effect against third parties. For example, they treat a mortgage contract as effective only upon registration, ignore that a pledge takes effect upon delivery of the pledged property, or fail to apply the rules on the order of priority among competing security interests over the same property, such as registration priority and the priority of a buyer who has paid the full price and taken delivery of the property.
Candidates mix up the 'contract effectiveness' and 'security interest establishment' levels, and they do not clearly remember the establishment standards for mortgage, pledge, and lien (registration for immovable property mortgage, registration for movable property mortgage as a requirement against third parties, delivery for pledge). They also lack a systematic understanding of the priority rules under the Civil Code and the judicial interpretation on the security system.
What to do instead
Build a table with columns for 'type of security, object, means of establishment, requirement against third parties, priority rule'. Key points: immovable property mortgage is established upon registration; movable property mortgage is established upon contract effectiveness but is not effective against a bona fide third party without registration; pledge is established upon delivery; lien is established upon lawful possession. Memorize the priority rules: registration precedes non-registration; among registrations, the earlier registration prevails; between a mortgage and a lien, the lien generally prevails. Practice with fact patterns involving multiple security interests over the same property and determine the order of payment.
When analyzing the validity of contracts, candidates equate 'contract not established' with 'contract invalid' and 'contract not effective', and they fail to apply the rules on contracts that are ineffective against a bona fide third party, contracts that are valid but cannot be performed, and the consequences of invalidity (restitution, compensation for reliance loss, and the relationship between liability for breach and liability for contracting negligence).
Candidates do not clearly distinguish the three concepts of establishment, effectiveness, and validity, and they confuse the grounds for invalidity under Article 153 of the Civil Code (violation of mandatory provisions, contrary to public order and good morals) with the grounds for revocation (fraud, duress, gross misunderstanding, unconscionability). They also fail to note that revocation must be exercised through litigation or arbitration within the limitation period.
What to do instead
Draw a flowchart: 'establishment (offer + acceptance) → effectiveness (conditions such as approval) → validity (grounds for invalidity)'. List the grounds for invalidity and the grounds for revocation separately, and note the limitation periods for revocation (generally one year; 90 days for gross misunderstanding; five years as the maximum). Memorize the consequences of invalidity: restitution of property, compensation for losses based on fault, and the priority of liability for contracting negligence over liability for breach. Practice with questions that require determining the nature of the contract first and then applying the corresponding rules.
When analyzing the validity of negotiable instruments, candidates judge validity based on the underlying relationship, believing that if the underlying transaction is invalid, the instrument is invalid, or that a holder who has not paid consideration cannot exercise instrument rights. They fail to apply the independence of instrument acts (无因性) and the rules on bona fide acquisition and the rights of a holder in due course.
Candidates apply general contract law thinking to negotiable instruments and do not understand that instrument acts are independent of the underlying relationship. They also confuse the defenses available against a direct party with those available against a holder in due course, and they do not remember the requirements for bona fide acquisition (paying a price, taking delivery, and no knowledge of defects).
What to do instead
Memorize the core rule: instrument acts are independent; defects in the underlying relationship do not affect the validity of the instrument, but a direct party may raise the defense of the underlying relationship against the other direct party. List the exceptions: the holder obtained the instrument by fraud, theft, or coercion, or knew of such circumstances, and the holder has not paid a corresponding price. Practice with fact patterns involving a forged endorsement, an instrument obtained without consideration, and a holder in due course, and determine whether the holder can exercise rights and against whom.
In criminal law questions, candidates fail to distinguish the stages of crime (preparation, attempt, abandonment) and the forms of joint crime (principal offender, accomplice, instigator, accessory), and they misapply the rules on suspension of sentence, commutation, and limitation periods. In particular, they confuse 'attempted crime' with 'preparatory act' and 'abandonment' with 'failed attempt'.
Candidates rely on everyday language rather than the statutory criteria: preparation is 'preparing instruments or creating conditions'; attempt is 'already proceeding to commit the crime but not succeeding due to reasons outside the offender's will'; abandonment is 'voluntarily abandoning the crime or voluntarily and effectively preventing the consequences'. They also fail to remember the special rules for the limitation period (interruption, suspension) and for sentencing in joint crimes.
What to do instead
Create a decision tree: 'Has the offender begun to commit the act? → No: preparation; Yes: did the crime succeed? → Yes: completed crime; No: was it due to the offender's will? → Yes: abandonment; No: attempt'. For joint crimes, list the criteria for principal offender, accomplice, instigator, and accessory, and the sentencing rules for each. Memorize the provisions on the limitation period: the period is calculated from the date of the crime; it is interrupted by a new crime; it is not subject to limitation if the offender escapes investigation or trial after a case is filed. Practice with short fact patterns to identify the stage and the form of joint crime.
In civil procedure questions, candidates confuse the allocation of burden of proof, the time limits for producing evidence, and the rules on jurisdiction (territorial jurisdiction, exclusive jurisdiction, jurisdiction by agreement). They often treat the plaintiff's burden of proof as absolute and ignore the reversal of the burden of proof and the court's duty to investigate and collect evidence.
Candidates memorize the general principle that 'the party asserting a fact bears the burden of proof' but do not master the special rules on reversal of the burden (such as in environmental pollution, product liability, and medical malpractice cases) and the rules on the court's ex officio investigation. They also fail to distinguish 'jurisdiction by agreement' from 'jurisdiction by the place of performance' and to remember the exclusive jurisdiction rules for immovable property and port operations.
What to do instead
Build a table of jurisdiction rules: general territorial jurisdiction (defendant's domicile), special territorial jurisdiction (place of contract performance, place of tort, etc.), exclusive jurisdiction (immovable property, port operations, inheritance), and jurisdiction by agreement (must be a court with actual connection, in writing, and not violate hierarchical or exclusive jurisdiction). List the situations of reversed burden of proof and the situations where the court investigates evidence ex officio. Practice with fact patterns that require determining jurisdiction first and then allocating the burden of proof.
In arbitration questions, candidates fail to distinguish the validity of arbitration agreements from the jurisdiction of courts, believing that once an arbitration agreement exists, the court has no power to review it, or that an arbitration award can be appealed to a court. They also confuse the grounds for setting aside an award with the grounds for refusing enforcement.
Candidates do not understand the relationship between arbitration and litigation: a valid arbitration agreement excludes court jurisdiction, but the court still has the power to review the validity of the arbitration agreement and to set aside or refuse enforcement of an award. They also confuse the procedures for setting aside (application to the intermediate court within six months) with those for refusing enforcement (raised by the party against whom enforcement is sought).
What to do instead
Memorize the key points: an arbitration agreement must be in writing and must designate an arbitration commission; if it is unclear or not agreed, the parties may supplement it, and if they fail to do so, the arbitration agreement is invalid. The court may review the validity of an arbitration agreement upon application. Setting aside an award: apply to the intermediate court within six months on statutory grounds. Refusing enforcement: the party against whom enforcement is sought raises the objection, and the court reviews it. Practice with fact patterns involving a defective arbitration agreement and an application to set aside an award.
In enterprise law questions, candidates fail to distinguish the liability forms of general partnerships, limited partnerships, and sole proprietorships, and they misapply the rules on the admission and withdrawal of partners, the transfer of partnership property shares, and the liability of a sole proprietor for debts. In particular, they treat a limited partner as bearing unlimited liability or treat a sole proprietor's debts as limited to the invested capital.
Candidates mix up the liability rules of the three enterprise forms and do not remember that a general partner bears unlimited joint and several liability, a limited partner bears liability to the extent of the capital contribution, and a sole proprietor bears unlimited liability with personal property. They also fail to master the rules on the transfer of partnership property shares (unanimous consent of all partners for transfer to an outsider) and the rules on the admission of new partners (liability for pre-admission debts).
What to do instead
Create a comparison table of the three enterprise forms: 'form of enterprise, liability of investors, rules on transfer of shares, rules on admission and withdrawal, rules on profit distribution'. Key points: a general partner bears unlimited joint and several liability; a limited partner bears liability to the extent of the subscribed capital contribution but may lose limited liability if they participate in management; a sole proprietor bears unlimited liability. Memorize the rules on transfer of partnership property shares and on liability for pre-admission debts. Practice with fact patterns that require identifying the enterprise form first and then applying the liability rules.
In administrative law questions, candidates fail to distinguish specific administrative acts from abstract administrative acts, and internal administrative acts from external ones, and they misapply the scope of accepting cases and the qualifications of the plaintiff. They often treat abstract administrative acts (such as administrative regulations and rules) as subject to administrative litigation, or ignore the rules on the defendant in administrative litigation (the administrative organ that made the act, the organ that made the reconsideration decision, and the authorized organization).
Candidates do not master the scope of accepting cases under the Administrative Litigation Law and the rules on the qualifications of the parties. They also confuse 'administrative reconsideration' with 'administrative litigation' and fail to remember that abstract administrative acts cannot be directly challenged but may be reviewed incidentally in litigation.
What to do instead
Memorize the scope of accepting cases under Article 12 of the Administrative Litigation Law and the situations of non-acceptance under Article 13 (state acts, abstract administrative acts, internal personnel decisions, and final administrative acts). List the rules on the defendant: the organ that made the act is the defendant; if reconsideration maintains the act, the organ that made the act and the reconsideration organ are co-defendants; if reconsideration changes the act, the reconsideration organ is the defendant; an authorized organization is the defendant. Practice with fact patterns that require determining whether the act is actionable and who the defendant is.