On October 17, the State Taxation Administration of China announced via its official WeChat account that five typical tax-related illegal cases have been disclosed.
**Case 1: Joint Investigation of Export Tax Fraud in Fujian**
In a collaborative effort involving various departments in Fujian, including the tax authority, police, the People’s Bank of China, and foreign exchange management, two exporting companies were found to be part of a fraudulent scheme involving fake invoices to obtain export tax rebates. Quanzhou Huatuo Xingsheng Import and Export Trade Co., Ltd. and Quanzhou Jindun Si Import and Export Trade Co., Ltd. were implicated in creating 3,383 fraudulent VAT invoices. They used methods such as “fake invoices for purchases” and conducted false exchanges through underground money houses, fabricating export business transactions to claim rebates. The authorities reclaimed 41.26 million yuan (approximately $5.7 million) of improperly claimed rebates. Ultimately, the Fujian Provincial Intermediate People’s Court sentenced 19 defendants, including Wang Renhe and Zhang Qingwo, to prison terms ranging from 2 years and 3 months to 12 years, along with fines totaling 59.42 million yuan (around $8.2 million). The judgment has now taken effect. A representative from the Fujian tax bureau emphasized a zero-tolerance approach toward significant tax violations, pledging ongoing efforts to maintain the integrity of the export tax rebate policy.
**Case 2: Tax Evasion via Inflated R&D Expenses in Shanghai**
In another case, the Fifth Inspection Bureau of the Shanghai Local Tax Bureau investigated Shanghai Tongteng Biotechnology Co., Ltd. Based on precise analysis of the evidence, the company was found to have inflated its R&D expenses by falsely claiming outsourced projects, resulting in an evasion of 2.06 million yuan (approximately $285,000). Following legal procedures in accordance with the Enterprise Income Tax Law and the Tax Collection Administration Law, the bureau recouped unpaid taxes, late fees, and fines that totaled 3.76 million yuan (around $530,000). Officials from the bureau reminded businesses of the October deadline for reporting R&D expense deductions for the third quarter and called for accurate and honest submissions.
**Case 3: Fake VAT Invoices in Hunan**
In Changde, Hunan Province, a joint investigation led by the local tax bureau and police dismantled a criminal group involved in issuing fake VAT invoices. The group set up several shell companies using others’ identities and created false operations to generate a façade of legitimate business. They issued 7,204 fake VAT invoices totaling 700 million yuan (around $98 million). Eight members of the group, including Tang Xiaoping and Song Jinzhi, were sentenced to prison terms ranging from 1 to 14 years and fined a total of 2.1 million yuan (approximately $292,000).
**Case 4: Tax Evasion by a Gas Station in Henan**
In Henan, authorities uncovered tax evasion at a gas station operated by Gongyi Hongli Materials Co., Ltd. The gas station utilized illegal modifications to fuel dispensers to conceal sales revenue and submitted false tax declarations, leading to an underpayment of 2.08 million yuan (around $290,000) in VAT and other taxes. Tax inspectors filed charges based on the Tax Collection Administration Law and the Administrative Penalty Law, resulting in a recourse of 3.28 million yuan (around $460,000) in total penalties.
**Case 5: Pharmaceutical Invoice Fraud in Sichuan**
Sichuan Yunbaotang Pharmaceutical Co., Ltd. was found guilty of issuing fake VAT invoices without legitimate business transactions. The criminal group behind this operation acquired over 1,300 fraudulent VAT and agricultural purchase invoices, obtaining illegal tax reductions. The company faced a fine of 400,000 yuan (approximately $56,000), while four individuals received prison sentences between 3 to 11 years, along with fines amounting to 100,000 yuan (about $14,000) and the confiscation of 500,000 yuan (around $70,000) in illegal gains.
Officials from the respective tax authorities reiterated their commitment to working in tandem with other departments to combat tax-related crimes, asserting a continued zero-tolerance policy to foster a fair and lawful taxation environment.
