As Chinese authorities have been trying to crackdown on tax evasion cases, officials have reportedly taken three employees from the Chinese arm of Japanese trading firm Marubeni Corp. into custody. The company’s grain trading unit has been rumored to have constantly evaded taxes on imported soybeans.
Chinese authorities arrested the employees after being tipped off that the company was skirting around taxes on certain imports. One of the arrested Marubeni staff, Zhang Wenjing, is a trading executive with Columbia Grain. Some sources said Zhang, along with the other two, were detained by customs officials in Qingdao, Shandong province. Another said that he was being investigated as “the customs received a tip-off that the company was suspected of evading taxes and smuggling by using provisional prices.” Officials from Columbia Grain denied the allegations and did not comment on the issue.
Sources said the company is able to evade taxes by declaring a different price of the soybeans from the actual value, enabling a cheaper value-added tax (VAT). Many said, the soybeans are being declared in a lesser value for cheaper tax, and then sold at a high price when it arrives at its destination. While a practice called delayed pricing is often used by companies, custom officials have been trying to crack down and have placed provisions for it.
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