13 arrested for VAT fraud
Thirteen suspects have been arrested in two large VAT frauds, Shanghai police said on Wednesday.
The total volume of the face value of the VAT invoices in the two cases amounted to over 3.6 billion yuan (US$540 million), police said.
No actual transactions happened at all, and the government received no VAT from the transactions which took place only on paper.
The suspects sold blank VAT invoices at about 10 percent of the face value of the "transactions" to their clients who run businesses and wish to evade taxes. VAT is 16 percent.
While the suspects did not pay VAT to the government as sellers of goods or services, their clients got greater VAT deductions from the government with the increased face value of their goods or services purchased.
In one case, a gang of eight people allegedly purchased licenses and blank VAT invoices of dormant companies from dealers in Guangdong Province at 100,000 yuan for each company. Dormant companies are those no longer paying tax but remain open for business.
The gang, which has been operating since January 2018, illegally issued VAT invoices in the name of those companies with the face value of transactions and VAT worth about 1.7 billion yuan, police said.
At least 155 companies sought the illegal VAT invoices from the gang, according to the police.
Police in Baoshan District said they started to investigate the case in November and caught all suspects on January 16 this year in Yangpu and Jiading districts.
In another similar case solved by police of the same district, at least 100 companies sought the illegal VAT invoices from suspects whose face value of transactions and VAT amounted to over 2 billion yuan.