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10 suspects detained in export tax rebate scam

TEN people have been detained for allegedly cheating 42 million yuan (US$6.66 million) in export tax rebate by declaring electronic exports at artificially high prices, Shanghai Customs said today.

The case involving goods valued at 288 million yuan in total is the biggest of its kind in Shanghai, officials said.

The 10 suspects, all Chinese, have exported electronic goods including capacitors, diodes and massage sticks to Hong Kong through six trading companies since 2009.

They purchased value-added tax invoices at a cost about 4.5 to 5.5 percent of an invoice face value and declared export items at prices 10 times higher than their market prices.

During investigations, custom officials found the gang exchanged foreign currencies through underground banks and deposited the money in a Hong Kong bank account. Every time the goods arrived, they used the Hong Kong account to pay the trading companies and obtain export earnings verification forms to apply for tax rebates.

The gang also hired smugglers to bring exported goods back into mainland and export them again and again to defraud tax rebates totaling 42 million yuan from 2009 to January this year.

Shanghai police arrested the 10 suspects on March 29 and they could face jail terms from 10 years to life imprisonment, custom officials said.


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