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40 held in city for US$305m VAT fraud

    Forty suspects were apprehended in different parts of Shanghai yesterday in connection with an investigation into the largest VAT fraud case in the city this year, police said.

    They are alleged to have illegally issued VAT receipts with a face value of over 2 billion yuan (US$305 million) to more than 300 companies in China, causing over 300 million yuan in lost tax.

    By charging 6 to 8 percent of the face value of the receipts, it is alleged the suspects made about 40 million yuan, police said.

    The suspects were detained at six locations in Shanghai along with over 20 printing machines, 30 USB sticks for online banking and 100 financial vouchers.

    The investigation began in May this year when police received information that some dealers in the city’s IT malls had issued VAT receipts to companies with which they had no actual transactions.

    Police did not name the IT malls, but said police from Jing’an and Hongkou districts were involved in the investigation.

    Before illegally issuing VAT receipts to other companies, the suspects paid others to issue such receipts in the same way to over 20 shell companies they controlled, police said.

    All the suspects have been placed under coercive measures for criminal offenses. Police said they will now investigate the companies which illegally issued the VAT receipts to the suspects as well as those that sought receipts from them.