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Tax Evasion under Microscope
China's crackdown on taxation crime has taken another step after new tax evasion and tax-resistance interpretations by the Supreme People's Court came into effect yesterday.

The move closely follows a tax refund fraud ruling that started in late September.

"The judicial interpretations will provide a powerful judicial guarantee for the enhanced crackdown on tax-related crimes and the trials of such cases," Zhang Jun, the court's vice-president, said yesterday.

The new interpretations mean people found guilty of fraudulent accounting practices or evading a certain amount of tax can go to jail for a maximum of seven years.

It also means people who have used force or threats to resist paying taxes will receive three to seven years in prison.

Zhang said the penalty for tax refund fraud, where people claim tax has been paid and products exported in an effort to get a tax refund, can be life imprisonment.

Acts also include the forging of business contracts, the illegal acquisition of export tax refund documents and the forging and illegal purchasing of value-added tax receipts.

Government officials and company heads have also been warned, as they will face criminal charges if found to be involved in illegal taxation activities.

Tax evasion, resistance and fraud have been serious problems in China recently.

One of the most notorious rackets was in southern China's Puning and Jieyang cities where more than 100 gangs were found to have evaded nearly 4.2 billion yuan (US$506 million) in taxes in 1999 and 2000.

In May last year, four criminals were executed for their involvement in the case.

Statistics from the Supreme People's Court show that between January and September this year, the number of tax refund fraud cases before the courts had risen three fold compared with the same period in 2001.

The courts dealt with 461 tax evasion and resistance cases in the first nine months of the year, up more than 16 per cent over the same period for 2001.

"The seriousness in tax evasion, resistance and fraud in tax refunds indicates that China still needs to strengthen its economic administration," Zhang said.

"There is still a long way to go concerning the enhancement of tax collection management and the crackdown on tax-related crimes," he said.

(China Daily November 8, 2002)

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