From August of the last year, the Taxation Bureaus in China have been checking if there are any invoice misconducts with pharmaceutical and medical device companies as well as medical treatment organizations.  It seems that the campaign has not come to an end yet because the examination result as General Administration of Taxation announced is just a phase summary.

So far, 12,000 businesses were examined involving 437,100 illegal invoices and RMB 15.036 billion (US$ 2.506 billion) face value.  The underpaid tax as much as RMB 3.692 billion (US$ 615 million) was disgorged.

By October of 2013, 6,599 medical treatment organizations were examined, 1,700 of which are the State-owned enterprises.  There were 14.98 million invoices collected as examination samples, 92,100 of which exceeded RMB 10,000 (US$ 1,666) in face value.  There were 33,600 pharmaceutical, medical device businesses and profitable medical treatment organizations examined, 291 of which were prosecuted for violating Chinese law.  There were 186 individual suspects arrested.  From examination, 114 bribing cases were discovered involving bribe amount as much as RMB 60.6858 million (US$ 10.1143 million).  There were 36 governmental officials disciplined and punished for taking bribes.

You may follow the link to check the news report in Chinese.

Regarding tax inspection campaigns, hereinafter are some key take-aways:

-The industries that are closely watched include real estate, construction and installation, drugs and medical devices, catering and entertainment and for-profit education and training.

-Tax inspection is always related with the inspection on invoices and accounting books.

-Tax bureaus spend great efforts in inspecting the authenticity of invoices (e.g., whether or not there is any business related with invoice) with big face value.

-Disbursement categories of meeting expenses, meal fees and office supplies expenses, commission and various service charge are examined and inspected carefully especially as for the invoices related to drugs and medical devices.

-False invoices discovered during the inspection cannot be used for pretax deduction, taxes deduction and tax refunds (exemption) for export and financial reimbursement and accounting.

-The Public Security Bureaus work closely with tax bureaus to prosecute criminal activities.