NewNanjing ‘smugglers’ accused of cheating tax-free scheme for Chinese border residents

Nanjing customs officials have arrested eight suspects accused of taking advantage of a tax-free scheme near the Chinese border to smuggle 510 million yuan (HK$641 million) worth of goods.

Residents living within 20 kilometres of China’s borders are allowed to purchase up to 8,000 yuan worth of goods a day – free of taxes and tariffs – in government-designated marketplaces, according to trade pacts with neighbouring countries including Vietnam, Laos and Myanmar.

These are called cross-border barter transactions.

Residents need a special government-issued permit, in the form of an ID, that certifies that they live close to the border and are thus eligible for the tax breaks.

However, the eight suspects allegedly collected 1,000 IDs and used them for a series of transactions at the tax-free marketplaces, saving them millions of yuan, according to a report by news site thepaper.cn on Thursday.

One of the suspects owned a Nanjing-based trade company that is accused of evading more than 110 million yuan in taxes since 2012 by using the scheme.