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May 30, 2018

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High-value tax fraud case sees 5 arrested

FIVE suspects have been arrested in one of the largest value-added tax (VAT) fraud cases in Shanghai in recent years, with another 10 being detained, police said yesterday.

The suspects allegedly issued fake VAT invoices with a total face value of over 3 billion yuan (US$470 million) to over 100 companies around the country beginning in March 2017.

Companies usually purchase fake VAT invoices to reduce their tax bills.

Police in Yangpu District started their investigation in December after receiving a report from the tax authority that several companies in the district had issued high face-value VAT invoices, even though no actual business transactions took place through these companies.

The invoices in question were issued from over 40 companies registered in Shanghai, mostly to businesses related to finance, environmental technology and construction, according to police.

The suspects are alleged to have pocketed over 10 million yuan from the illegal business.

Their “clients” transferred money into the suspects’ company accounts, and the suspects returned the money to them later together with issued invoices after deducting up to 3 percent of the face value of the invoices, police said.

The suspects were apprehended in locations in Yangpu, Baoshan, Changning and Jing’an districts and the Pudong New Area at the end of March. They were said to have been discovered with a large number of blank invoices during police raids.

Police said an investigation against companies which allegedly sought the suspects’ services is still under way.

Yuan Jian, a Yangpu police officer working the case, said the suspects could be sentenced to up to seven years in prison if convicted.

“Issuing fake VAT invoices with face value of at least 400,000 yuan, or issuing at least 100 of them, is considered as a crime,” he said.

Yuan explained that the companies which allegedly issued fake VAT invoices in this case probably got blank invoices from the tax authority in order to conduct legitimate business.


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