(Yicai Global) June 5 -- China has issued tax reduction policies since February to support producers of Covid-19 control supplies and help companies in difficulties, but some firms have defrauded the government to get these benefits. The country’s regulator had investigated a total of 1,859 firms for such tax incentive fraud by the end of last month.

Some 1,658 companies have been referred to police, and 734 persons have been taken into custody for creating false invoices, Yicai Global learned from the State Taxation Administration.

The State Taxation Administration announced one textbook case. A criminal gang led by a person surnamed Chen registered 97 commercial and trading companies in nearly three months this year and allegedly issued 2,331 false invoices with a face value of CNY210 million (USD29.6 million) for 146,700 masks, 7 million milliliters of alcohol and other disinfectant, and temperature-gauging instruments for Covid-19 control. The police have detained five key suspects, and the case is under further investigation.

China has issued many policies to reduce taxes and fees this year, such as exempting companies which make and transport Covid-19 control supplies from the value-added tax and giving tax breaks to firms in transport, catering, accommodation and tourism hit hard by the coronavirus. Such policies are expected to ease the burden on companies by CNY2.5 trillion (USD352.4 billion) this year.

The tax agency will further cooperate with police to crack down on companies which issue fake invoices without any actual business, fraudulently obtain export tax refunds without any exports, or otherwise defraud the government to gain Covid-19 control tax incentives without meeting the requirements, said Guo Xiaolin, director of the inspection bureau under the country's State Taxation Administration.

Editor: Ben Armour