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Police 'uncover 17m yuan VAT scam'
    A foreign trade company owner from Shanghai and a private trader from Wenzhou have been arrested for forging VAT invoices and illegally acquiring over 17 million yuan (US$2.6 million) of tax refunds from the government.
    Police said yesterday that from January 2013 to October 2016, the duo allegedly paid companies in Guangdong and Jiangxi provinces to get fake invoices with a face value of over 100 million yuan for exported electric torches.
    A 34-year-old man surnamed Bao, who had private businesses in Zhejiang and Guangdong, bought the electric torches from small and often unregistered businesses in Guangdong and sold the products to foreign wholesalers.
    No invoices were issued between the parties to avoid paying taxes and in this way, the sellers undercut their market competitors, according to the police.
    As Chinese traders who sell electric torches overseas can get a VAT tax refund from the government, Bao, in a drive to boost profits, engaged the companies in Guangdong and Jiangxi and a 37-year-old woman surnamed Ding who was based in Shanghai.
    He paid 10 to 12 percent of the face value of the invoices to those companies that issued the fake invoices to Ding’s foreign trade companies, purporting to show Ding’s companies had purchased the goods from the companies for export to overseas, police said.
    The face value of the invoices, however, was allegedly five to 10 times the market price of the goods. Bao and Ding used the invoices to get the VAT tax returns worth 17 percent of the market price of the goods from the government.
    Investigation started earlier this year when police were tipped off by the national tax authority about the suspicious trading activities.
    A man surnamed Yu based in Guangdong, whose company allegedly issued the fake invoices to Bao, has also been arrested, while another suspect was put on bail, police said.