About 80 businesses and individuals have been ordered to pay additional taxes of 4 billion yen in relation to consumption tax fraud, The Yomiuri Shimbun has learned.
Tax authorities conducted their first nationwide investigation concentrating on the false declaration of consumption taxes, targeting tax-free shops and other businesses. Of the 4 billion yen, about 3 billion yen was levied on two gold-bullion buyers, as there was not enough evidence to back up the purchases from Chinese and other customers recorded in their books.
The consumption tax hike last October means the gain from such frauds would be higher, and seven regional taxation bureaus, including Tokyo, Osaka and Fukuoka, conducted the investigation in light of the need to strengthen their inspections.
According to sources, Kanro Shoji, a company based in Taito Ward, Tokyo, that buys gold bullion, was charged the largest amount of about 2.4 billion yen in additional tax, including the amount levied due to understatement, for the three years ending August 2019.
The company had posted large profits from reselling gold bullion it bought mainly from Chinese nationals and claiming the input tax credit (ITC), in which the consumption tax paid when a company makes a purchase is deducted from the consumption tax received when it makes a sale. The ITC system is designed to prevent double taxation.
The Tokyo Regional Taxation Bureau checked the immigration records of Chinese nationals on Kanro Shoji's books and found that many of them had already left Japan at the time of the transactions. The Tokyo bureau determined that the company did not meet the ITC requirement of accurately recording a supplier's name and other information in its books. The bureau charged Kanro Shoji for the consumption tax it should have paid.
A person at Kanro Shoji told The Yomiuri Shimbun: "It's impossible for a company to check the immigration records of its customers. Our transactions and declarations are proper, and we requested the National Tax Tribunal examine the case."
In addition to the case above, tax authorities also identified dealers that received sales tax refunds for allegedly selling tax-free to Chinese tourists iPhones and other products purchased in bulk at electronics retail stores. In reality, they had resold the goods within Japan or exported them to China.
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