Recently, a Chinese manufacturer from the city of Mianyang, Sichuan, was discovered to have stolen millions in value-added tax rebates through a fraudulent scheme. Furthermore, local media uncovered a chain of businesses associated with similar schemes, indicating a total of about $70 million in lost revenue for the local governments.
Value-added tax (VAT), in simple terms, is a tax on the value added to a good or service after it completes each step of the manufacturing process. China has a value-added tax system for its commodities and services that the United States doesn’t have. It also has tax rebates on exported goods or services to avoid double taxation upon entering other countries.
