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July 27, 2012

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Hidden gold trick made illegal fortune

FOUR people have been detained for fraudulent export tax rebates exceeding 2.6 million yuan (US$407,142) from inlaying gold into earphones to be sold outside China's mainland, Shanghai police announced yesterday.

The suspects purchased earphones at a wholesale price of 4.8 yuan a pair from April to June 2009. They then inlaid each pair of headphones with gold worth about 500 yuan and sold the product to a Hong Kong buyer at a price of US$88 each via trade agencies.

The Hong Kong company then detached the gold in the earphones, thus profiteering from the transaction before sending the earphones back to Shanghai.

China's tax law ruled that trading of electronic items like the earphones will be entitled to a tax rebate of 17 percent, while transactions of valuables such as gold won't be eligible.

"The guy in the Hong Kong company is part of the ring and all they did was to cheat the rebate of tax," said Xu Xiang, an economic crimes detective with Shanghai police. "They chose gold because gold is a stable currency and could be easily cashed."

The gang repeatedly used the same earphones, raising the suspicions of Customs officials, who informed police, Xu said yesterday.

After investigation and evidence collection, the police launched a campaign on February 8 and caught the suspects in Guangdong and Jiangxi provinces and Hong Kong.

Police said the gang had illegally gotten tax rebates of more than 2.6 million yuan. The suspects confessed, officials said, and three were arrested after prosecutors approved.


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