On October 17, the State Taxation Administration of China announced five significant tax-related legal cases involving fraudulent activities such as export tax rebate fraud, overstating R&D expenses for tax evasion, issuance of false VAT invoices, and tax evasion among gas stations.

In Fujian, two exporting companies, Quanzhou Huatu Xinjing Import and Export Trade Co., Ltd. and Quanzhou Jindunsi Import and Export Trade Co., Ltd., were found to have obtained a total of 3,383 counterfeit special VAT invoices. They employed methods like “buying invoices” and conducting false currency exchanges through underground banks to fabricate export transactions and fraudulently claim export tax rebates. The local tax authority in Quanzhou successfully recovered 41.26 million yuan in fraudulently claimed tax rebates. Nineteen defendants were convicted of crimes including fraudulently claiming export tax rebates, issuing false VAT invoices, illegal business operations, and trading state agency documents, receiving prison sentences ranging from 2 years and 3 months to 12 years, along with total fines amounting to 59.42 million yuan.

In Shanghai, tax authorities uncovered a case involving Shanghai Tongteng Biotechnology Co., Ltd., which falsely declared R&D expenses to evade taxes. The investigation revealed that the company inflated its R&D deductions by fabricating outsourced research projects, resulting in tax evasion of 2.06 million yuan. The tax bureau subsequently collected the owed taxes, imposed late fees, and additional fines, bringing the total to 3.76 million yuan.

In Hunan, a joint operation between tax authorities and the police dismantled a criminal group involved in issuing false VAT invoices. The gang created multiple shell companies under stolen identities, leased abandoned factory spaces, and fabricated electricity expenses to create the illusion of legitimate business operations, issuing 7,204 false VAT invoices totaling 700 million yuan. Eight criminals were sentenced to prison terms ranging from 1 to 14 years for offenses related to issuing false VAT invoices and additional fines totaling 2.1 million yuan. Assets unlawfully obtained amounted to 7.06 million yuan, which were confiscated.

In Henan, tax authorities uncovered tax evasion at a gas station owned by Gongyi Hongli Material Co., Ltd. The station manipulated fuel pump software and altered data to conceal sales income, resulting in underreporting VAT and other taxes by 2.08 million yuan. The tax bureau pursued back taxes, accrued late fees, and additional penalties, totaling 3.28 million yuan.

In Sichuan, a collaborative investigation with the police led to the discovery of false VAT invoice practices linked to Sichuan Yunbaotang Pharmaceutical Co., Ltd. The investigation revealed that a criminal gang controlled the company and issued over 1,300 VAT invoices by fabricating false herbal material transactions and paying “invoice fees,” despite no real business transactions taking place. The fiscal authority imposed a 400,000 yuan fine on the company, while four individuals faced prison sentences ranging from 3 to 11 years for similar offenses, collectively fined 100,000 yuan, and had 500,000 yuan in illegal earnings confiscated. Separate actions are being taken against upstream entities involved in issuing fraudulent invoices.