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Monday, 15 January, 2001, 14:44 GMT
Major China tax fraud trial opens

By Duncan Hewitt in Shanghai

Nine people have reportedly gone on trial accused of defrauding the state of some $25m in export tax rebates.

They are said to be just the first batch of defendants to be tried in a case which some have estimated could involve around $12bn.

Chinese official being tried for corruption
China has sentenced numerous officials to death
The official China news service said the defendants, who are on trial in Shantou and Jieyang in Guangdong province, had registered fake companies.

It said that with the help of criminal elements in the local tax bureau they were then given false receipts which stated they had paid value added tax on non-existent export sales worth almost $150m.

This allowed them to claim the tax rebate which China offers to exporters to encourage foreign trade - a total of over $24m.

A central government inspection team is continuing investigations in the area.

Death sentence

Unconfirmed reports in the Hong Kong press say investigators have discovered that a network of corrupt local officials and businessmen throughout eastern Guangdong province are responsible for a huge tax fraud - which some estimates say could be worth as much as $12bn.

Poster of convicted official
China has launched a major campaign against corruption
That would be double the sum involved in the smuggling scandal in Xiamen, further up China's south-east coast, for which 11 people were recently sentenced to death.

China's prime minister recently announced a major crackdown on export tax fraud, which along with smuggling is seen as a major cause of lost revenue, particularly in the free-wheeling southern provinces.

Threats

According to Hong Kong media, the head of China's national tax administration has personally visited Guangdong to supervise the investigation.

But there are reports that the investigation team has had to increase security following a series of threats.

Officials announced recently that a crackdown on tax fraud had recouped more than $3bn last year - but China's tax revenue remains relatively low, at around 14% of GDP.

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See also:

05 Jan 01 | Asia-Pacific
China steps up war on corruption
21 Dec 00 | Asia-Pacific
China to execute corrupt boss
08 Dec 00 | Asia-Pacific
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29 Nov 00 | Asia-Pacific
'Smuggling kingpin' loses freedom case
13 Sep 00 | Asia-Pacific
Corruption: End of China's Party?
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China officials 'to face death penalty'
09 Aug 00 | Asia-Pacific
Chinese corruption partner gets life
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