Aids NGO fears axe as tax snoops close in

PUBLISHED : Friday, 21 May, 2010, 12:00am
UPDATED : Friday, 21 May, 2010, 12:00am

The Aizhixing Institute, a prominent Aids advocacy group on the mainland, is facing a new round of investigations by the authorities, and Wan Yanhai - its founder, who recently left the country - fears its closure is imminent.

Investigators from the Beijing Local Taxation Bureau visited Aizhixing's office on Wednesday and questioned its staff over unpaid business taxes since 2002, the year the group was founded, Wan (pictured) said.

They also ordered the staff to produce by today all documents related to the group's overseas financing in the past seven years. This includes details of its financial accounts for this year and those between 2002 and 2007 as well as its financial and audit reports in the same period.

The tax bureau also wants to see all of Aizhixing's contracts with its overseas donors.

Wan said it is simply impossible to find all the documents in time.

'If we can't produce what they've asked for, I'm sure they will come and raid the office,' he said by phone from the United States. 'We might be closed down anytime within a week. It is a very urgent situation.'

The latest scrutiny of Wan and his group has stoked fears of a widening crackdown on mainland civil society. The government looks on non-governmental organisations that receive financing from abroad with particular suspicion.

Wan, who left the mainland with his family this month, citing increasing pressure from the government, had said his departure might take some pressure off his organisation. It appears the opposite is true.

Wan fears Aizhixing will face hefty fines if the tax authorities insist on classifying its overseas donations as commercial income.

Beijing does not allow independent NGOs, such as Aizhixing, to register as non-profit organisations without a government-backed agency as their caretaker. As few government bodies want to be responsible for them, most are forced to register as companies and must therefore pay taxes.

Wan said the district tax and audit authorities had long acknowledged his group's non-profit status and had never required it to pay business taxes.

He is worried his group will meet the same fate as the Open Constitution Initiative, or Gongmeng, the independent legal aid centre that was closed down last year over alleged tax evasion.

Gongmeng was fined 1.42 million yuan (HK$1.62 million), or five times the taxes the authorities said it evaded. Gongmeng's office was also raided before it was shut down and its computers and documents confiscated. Its founder, Xu Zhiyong , was detained for three weeks.

Wan said if the tax authorities decided to charge Aizhixing business tax retroactively and apply the maximum fine as it did for Gongmeng, it could face a penalty of as much as 8 million yuan. Aizhixing has received donations of about 25 million yuan - or 20 times the amount Gongmeng received - since its launch.

Li Xiongbin , Aizhixing's legal adviser, questioned the legality of the tax authorities' action. He said in 2008 they had checked the group's accounts for the previous two years and had not found any breaches.

He also said the law forbids repeated tax investigations and breaches that took place more than five years ago are not punishable.

'[Tax] probes shouldn't be arbitrary ... but I'm worried they might have been used as a [political] tool,' said Li, who was also Gongmeng's legal adviser.

The Beijing Local Taxation Bureau said yesterday it was carrying out investigations according to law.

Wan said not only had the tax, commerce and industry bureaus investigated his group in recent months, the fire department had also checked his office for any breach of regulations.