A 21-MEMBER ring of alleged tax fraudsters stood trial Monday in a Shenzhen courtroom charged with cheating the government out of 80 million yuan (US$12.9 million) in tax rebate payments.

    According to prosecutors, the ring was headed by three people, surnamed Zhang, Xue and Zhuo. Collectively they controlled a number of foreign trade companies and garment manufacturers. It is alleged that they and their cohorts falsified more than 10,000 value added tax (VAT) receipts, totaling 1 billion yuan. These documents were used to claim tax rebates from taxation authorities.

    Between 2009 and 2011, Zhang and his uncle established Shenzhen Longtaixiang Import and Export Co. and Shenzhen Dongfang Honghao Supply Chain Co. Authorities charge that these entities served as front companies and through them falsified customs declarations were submitted.

    Between 2008 and late 2011, 10 garment manufacturers in Shenzhen issued fraudulent VAT receipts to Zhang and his companies, which in return paid commissions of 1 percent of the VAT receipt sums or 15,000 to 20,000 yuan per month to the garment manufacturers. Zhang and his men then falsified sales contracts, invoices and account books. Their foreign trade companies falsified export contracts and colluded with shipping agencies to produce false customs declarations.

    The companies received tax rebates from the government at 5-8 percent of their falsified exports.

    The complex scam was exposed in November 2011 when taxation inspectors discovered suspicious accounting records and supporting documents in Longtaixiang.

    The trial is ongoing.

    (Han Ximin)