AN illegal ring involving 14 gangs in several cities that had fraudulently issued value-added tax invoices totaling nearly 10 billion yuan (US$1.44 billion) was recently busted by the Shenzhen police and tax bureau, sznews.com reported.

A total of 50 suspects belonging to 14 gangs have been arrested by police after officers raided 32 dens scattered around different cities in China.

In May this year, the tax authority in Futian District identified a company named Shenzhen HT Management Co. as highly suspicious as it had issued VAT invoices of goods valued at hundreds of millions of yuan in only two months’ time.

What made it more suspicious was that the company had in fact suspended business since May last year, but changed its legal representative in April this year and started to issue large tax invoices again.

The tax authority in Futian locked the company’s business operations and reported the case to the municipal tax bureau’s investigation and enforcement bureau. Based on existing clues, the investigation and enforcement bureau suspected the company of being involved in tax fraud and further looked into the case by collaborating with the Shenzhen Municipal Public Security Bureau.

The investigative team found that the company had purchased tax invoices from the authority as many as 852 times through a delivery record. The address on the delivery record showed that the company was located in a building in Bao’an District.

It turned out that the company, re-registered under the name Shenzhen ST Management Co., was an agency that helped register new business and handle tax affairs for other companies. However, despite the normal business, the company also made profit by registering fake companies and swindling tax refunds illegally.

Through cross-city investigation, the police eventually busted 14 gangs based in six different cities and provinces including Shenzhen, Liaoning, Shanghai, Jiangsu, Zhejiang and Hebei.

(Zhang Qian)