China’s STA Uncovers Tax Fraud: Fabricated R&D Expenses Expose Companies to Legal Risks

• China’s State Taxation Administration uncovered four tax fraud cases involving fake R&D expenses to claim tax incentives.
• These scams expose companies and executives to legal and tax risks.
• Case 1 involved a coal mining company inflating R&D costs by CNY 13.39 million using fake staff and records, resulting in a CNY 1.85 million penalty.
• Case 2 involved an IT company inflating R&D expenses with fake engineers, leading to CNY 1.5 million in recovered taxes and penalties.
• Case 3 involved a materials firm fabricating gold inventory impairments, resulting in CNY 52.3 million in back taxes and penalties.

Source: wts.cn

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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