27 February 2018, Zhenjiang police have announced they have cracked China’s largest case of export tax rebate fraud, amounting to ¥760m.
An official letter released by the Zhenjiang police, only half an hour’s drive from Nanjing, states that after a year and a half’s investigation, they have finally cracked the case of “Largest Ever Fake Export Tax Rebate”, and have arrested 14 suspects.
“This is the first case of taking full advantage of mobile phones as props to cheat export rebates in China”, said Gao Jianxin, Party Committee Member of the Zhenjiang Municipal Public Security Bureau and Economic Investigation Detachment, speaking with reporters. He also later said that four gangs were involved in the massive fraud case.
To encourage the development of the communications industry, China set up provisions that allow relevant companies exporting Chinese mobile phones a 17 percent tax rebate. Unfortunately, the faked export of mobile phones can not only to avoid barriers that limit phone production licensing, but also open up the valuable market for viable claims of the 17 percent mobile phone export tax rebate.
These companies often choose less-developed areas as their main target, where there is also the most intense market competition for domestically-made mobile phones. In 2016, Zhenjiang customs discovered abnormalities in foreign trade companies and initially suspected fraud.
Police were quoted as saying that the work was flawless, leaving no room for mistake and that authorities found it hard to find where to start. They resulted in searching for clues from over 40,000 tax declarations and more than 5,000 invoices.
August 2017, local police organised 100 police and customs officers into 11 arresting teams. When the main suspect, Hong Mou, crossed the border from Hong Kong into Shenzhen, he and 12 other suspects were arrested. Computers, bank cards and seals were confiscated and 180 bank accounts were frozen, reported Sina News.
A police representative said, ”The police will further retrieve a large number of value-added tax receipts that have been obtained and tap the criminal clues for the export of tax frauds by other criminal gangs and implement verification on the spot. On the basis of making the case bigger and more practical, we will expand the crackdown on criminal achievements and ensure that national interests are not harmed”.
