Billions in gold tax evaded in Chinese invoice scam: CCTV

In a crackdown on tax fraud by the taxation and public security authorities in Shenzhen, the company, Longhaitong, was discovered to have used 143 invoices to buy 868.8 million yuan (HK$1 billion) in spot gold through members of the Shanghai Gold Exchange, state-run China Central Television reported, without specifying when the transactions occurred.

Members of the bullion exchange are allowed to conduct spot gold transactions without having to pay a 17 per cent value-added tax.

READ MORE: China’s crackdown on tax evasion to impact cross-border transactions

According to the report, the invoices helped Longhaitong 147.7 million yuan in tax.

“The company got the invoices from the Shanghai Gold Exchange and offered these invoices to other companies. And these invoices are for gold VAT [exemptions],” Tong Zhenji, an official with the Shenzhen Municipal Public Security Bureau, was quoted as saying.

The company then sold the invoices to companies charging a 6 per cent fee so that these firms, who were not members of the Shanghai Gold Exchange, could also trade gold tax-free, the report said.

The report said Longhaitong and other companies could have evaded as much as 6 billion yuan in taxes in total.