A Chinese company was detected purchasing a large amount of gold in a short period of time. It said it uses gold for production. But the products it sold did not contain gold.
That company is Sichuan Guojinbao Industrial Co., Ltd, based in Mianyang City, Sichuan Province. Its owner bought a lot of gold, and then immediately sold it at a loss, though he is not stupid.
From the invoices of Guojinbao, the police found that the company purchased 41 kilograms of gold in three batches between September and November 2019. Their total value was more than 10 million yuan (about 1.5 million dollars).
The investigation also found that Guojinbao allegedly sold its products to Hong Kong through a company in Shenzhen. The company then applied for tax rebates in Mianyang and Shenzhen.
In 2020, Shenzhen’s tax department doubted the authenticity of the company’s tax refund. It sent a letter to the tax department in Mianyang, suggesting an investigation into the company.
The results of the investigation show that the actual controller of Guojinbao and the actual controller of the Hong Kong buyer are the same person.
The company’s so-called export activity is just a change from its left pocket to its right pocket.
The investigation revealed that the gold they bought in Shenzhen was not shipped to Mianyang at all, but sold on the spot, often at an abnormally discounted price.
In March 2021, the suspect admitted that its activities were nothing but deceit. The only real purpose was to defraud the tax rebates. After their products are shipped to Hong Kong, they end up being disposed of as waste.
China’s export tax rebate refers to the refund of the value-added tax paid in various production links and circulation links in China for goods declared for export. This avoids double taxation of businesses both domestically and abroad.
The abnormal behaviors of Guojinbao and the actual controller have a reasonable explanation.
According to the confession obtained by the police, Guojinbao chose gold because of its high value. So the company could obtain a high value-added tax invoice, which could be used to defraud the tax refund. The gold was sold at a reduced price on the same day as the gold was withdrawn, in order to quickly return the funds.
Although every gram of gold was sold at 0.3 to 0.5 yuan (about 4 to 7 cents) below the purchase price, with a total loss of about 20,000 yuan (3,000 dollars), they have received tax rebates of more than 590,000 yuan (89,000 dollars) and more than 1 million yuan (150,000 dollars) tax refunds have not yet been declared. So this is still a good deal.
Moreover, the buyer of gold is a manufacturer or individual who does not need an invoice.