After over 80 million yuan worth of gold was invested in R&D, it "disappeared without a trace." What happened?

According to the website of the State Taxation Administration, recently, the Shenzhen Taxation Bureau Inspection Bureau of the State Taxation Administration, based on tax big data and relevant tax-related clues, investigated and handled, in accordance with the law, a case of tax evasion by Shenzhen Kingsda Applied Materials Co., Ltd. through illegally enjoying preferential tax treatment for additional R&D expense deductions. Upon investigation, the company engaged in false tax declarations by falsely listing expenses for gold materials in R&D expenses, illegally enjoying preferential tax treatment for additional R&D expense deductions, and underpaying corporate income tax by 16.2116 million yuan. Additionally, the company was found to have other instances of underpayment of taxes. In response to its illegal activities, the inspection department made a decision to recover the underpaid taxes, impose late fees, and impose fines totaling 36.1815 million yuan in accordance with the law.

The "whereabouts unknown" of over 80 million yuan worth of gold invested in R&D

In the early stage, through tax big data analysis, the Shenzhen Taxation Bureau Inspection Bureau discovered that Shenzhen Kingsda Applied Materials Co., Ltd. had made significant R&D investments, far exceeding the normal levels within the same industry. In response to this suspicious clue, inspectors compared the company's declared data, financial records, and inventory data, and found that the company had listed over 80 million yuan worth of gold investments in the "R&D expenses - direct materials" account during the inspection period, with neither corresponding finished product output nor records of scrap recovery.

In response to the above suspicions, inspectors initially interviewed Zhang, the then-legal representative of the company, who claimed that the over 80 million yuan worth of gold had been lost due to purification processes.

According to common knowledge, gold is an element with extremely high chemical stability in nature, easily purified, and possesses monetary attributes, with high value and strong liquidity. The over 80 million yuan worth of gold involved in this case is not a small amount. It is indeed difficult to comprehend that such a significant loss would occur due to purification processes. What is even more suspicious is that, given such a large loss, the company still listed gold expenses for each R&D project. Do all these R&D projects truly require gold investments? Inspectors could not help but raise questions.

The claim of "gold loss due to purification" collapses on its own

Based on the accounting books and invoices provided by the enterprise, inspectors discovered that two gold purification institutions had provided gold purification services to the company in three separate years. To verify the company's gold R&D purification loss situation, inspectors issued and delivered "Tax Assistance Inspection Notices" to these two institutions in accordance with the law.

According to the feedback from the two purification institutions, the first institution had received over 1.3 million grams of gold materials from the company for purification processing, with basically no loss after processing and purification, returning gold of approximately the same weight to the company, and charging a purification fee (including loss) of 517,313 yuan; the other institution had received over 300,000 grams of gold materials from the company, and after processing and purification, returned gold of approximately the same weight to the company, charging a purification fee (including loss) of 171,760 yuan.

The purification feedback from these two institutions largely confirmed the inspectors' judgment that the loss of gold during purification was low, which was clearly inconsistent with the substantial loss claimed by the enterprise.

Given that the company's financial statements indicated such significant losses of gold, there should have been "traces" of this process. Did the enterprise have any relevant supporting materials? However, the inspectors did not find any records related to the company's R&D finished products or R&D scrap in the relevant materials, account books, and vouchers provided by the company for its R&D projects. Meanwhile, the enterprise was also unable to provide relevant evidence. The substantial loss of gold during purification claimed by the company was simply untenable.

The chain of evidence unveiled the "veil" of tax evasion.

If the reason for the gold loss was "untenable," was the substantial amount of gold truly invested?

After analyzing over 30 R&D projects of the company one by one, the inspectors discovered that there were suspicions of gold usage in multiple projects of the company, with some projects having no process of using gold during R&D. Meanwhile, based on the project appraisal results issued by third-party appraisal institutions, the Inspection Bureau ultimately confirmed that the company had falsely listed expenses for gold materials and illegally enjoyed tax incentives for additional R&D expense deductions in 17 R&D projects, resulting in a total underpayment of corporate income tax of 16,211,600 yuan. In addition, during the inspection process, it was also found that the company had other acts of underpayment of taxes.

The inspectors once again interviewed the company's legal representative, Zhang XX, and conducted legal education for him, informing him of the corresponding legal responsibilities that might arise. In the face of various evidence presented by the inspectors, Zhang XX still refused to admit the relevant illegal facts and was unable to provide reasonable explanations. However, in the face of conclusive evidence, the company's illegal acts could not be concealed and would ultimately be subject to legal punishment.

According to the first paragraph of Article 63 of the Law of the People's Republic of China on the Administration of Tax Collection: Where a taxpayer forges, alters, conceals, or unlawfully destroys account books or accounting vouchers, or overstates expenses or fails to record or understates income in the account books, or refuses to file tax returns or makes false tax returns after being notified by the tax authorities to do so, and fails to pay or underpays the tax payable, it constitutes tax evasion. For taxpayers who evade taxes, the tax authorities shall recover the unpaid or underpaid tax, surcharge for overdue payment, and impose a fine of not less than 50% but not more than five times the amount of the unpaid or underpaid tax; if the act constitutes a crime, criminal responsibility shall be investigated according to law.

The Inspection Bureau of Shenzhen Municipal Tax Service, State Taxation Administration, classified the relevant illegal acts of Shenzhen Kingstar Advanced Materials Co., Ltd. as tax evasion and made a decision to recover the unpaid tax, impose a surcharge for overdue payment, and impose a fine in accordance with the law.