(Yicai Global) July 6 -- Using big data analysis of the tax system, regulators in Shanghai recently solved a case of fake invoicing that involved about CNY5.6 billion (USD830 million). Shockingly, the main suspects were all finance and tax professionals, some having even published books.

This is the first case in Shanghai involving the use of preferential tax policies to falsely issue special value-add tax invoices to defraud on taxes. The police have arrested 48 suspects.

According to initial figures, the total amount involved was about CNY5.6 billion, with more than 40 downstream enterprises suspected of defrauding over CNY15 million (USD2.2 million) in tax refunds.

Yicai Global learned that the suspects set up cross-regional, multi-level invoicing enterprises in an attempt to evade tax authorities with complex business and invoice flows.

Through big data analysis and with police help, Shanghai tax inspectors found criminal gangs issuing special VAT invoices through affiliated enterprises without real transactions to help the invoiced companies defraud on tax rebates.

A tax expert told Yicai Global the fact that the main suspects in the case are finance and tax professionals actually serves as a warning and deterrent. In recent years, cases of false invoices of large amounts of VAT have displayed the hallmarks of gang crimes with concealed and professional methods.

“At present, tax big data is relatively powerful,” said the expert. “It is relatively easy to investigate tax fraud and evasion conducted through malicious tax planning.”

China’s tax rebate policies have been issued to support the real economy. They have eased the financial pressure on firms, helping them to bail out. The continuous battle against false VAT invoicing is another measure to ensure the sound implementation of such policies, he added.

Editor: Peter Thomas