On 28 September 2026, the First Inspection Bureau of the Linyi Municipal Tax Bureau, Shandong Province, announced the investigation of Linyi Qunce International Trade Co., Ltd. for falsely reporting commodity classifications (HS codes) to fraudulently obtain higher export tax refund rates. The enterprise deliberately misclassified low-refund-rate products as high-refund-rate categories in customs declarations and corresponding VAT invoices. The scheme exploited the differential refund rate structure under the Notice of the Ministry of Finance and State Taxation Administration on Adjusting Export Tax Rebate Rates for Certain Products (Cai Shui [2024] No. 15). The investigation uncovered that the company maintained dual sets of books and instructed suppliers to issue invoices matching the false classifications.
Key Takeaways
- HS Code Accuracy is Legal Obligation: Exporters are legally responsible for the correct classification of goods under the Customs Commodity Nomenclature. Misclassification to manipulate refund rates constitutes fraud under Article 63 of the Tax Collection and Administration Law.
- Supplier Complicity Risk: The case highlights that suppliers who knowingly issue invoices with incorrect product descriptions become accomplices. Tax authorities are extending liability to upstream issuers.
- Data-Driven Detection: The anomaly was flagged by the “Refund Rate Abnormality Model” which compares an enterprise’s declared refund rates against industry benchmarks and historical profiles. Enterprises with rates significantly above sector averages are automatically selected for verification.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement