It's a crime punishable by death on the mainland yet some enterprising businessmen think ripping off the taxman is worth the risk.
To be precise, entrepreneurs have made a business out of trafficking invoices generated by the mainland's value-added tax (VAT). Since 1994, a sales tax of up to 17 per cent has been levied on the added value to a product, material or service at each stage of manufacturing or distribution.
The upshot is the VAT is now the single biggest source of revenue. In the first nine months of last year, tax authorities collected 1.5 trillion yuan (HK$1.76 trillion) from VAT - 27 per cent of the country's total tax intake.
VAT invoices are particularly important to companies operating in the mainland because they can be used to offset taxes.
It is unclear how much tax revenue is lost to the government each year through the fraudulent trading of VAT invoices but anecdotal evidence suggests the practice is widespread, relatively open and performed by what appear to be professional invoice traders. The office of this newspaper in Shanghai receives about 10 faxes a week from dealers offering to sell VAT and other types of invoices - at a discount. The offers do not disclose any names but usually provide a mobile-phone number. 'This can help your company to save at least 90 per cent taxation,' one recent faxed offer promised.
Robert Li, China tax partner at international accounting firm PricewaterhouseCoopers, said providers of fraudulent VAT invoices fell into two camps: unethical entrepreneurs who have forged invoices to sell; or owners of financially troubled companies seeking additional revenue by selling their own legitimately acquired VAT invoices.
Whatever the case, 'the practices are all illegal', Li said. The culprits would face 'harsh penalties' if they were caught.