Tax officials and police have uncovered a tax fraud case involving 2.8 billion yuan (US$340 million) and 211 firms across 11 provinces, the State Administration of Taxation announced on Thursday.

An official with the administration said that 75 major suspects have been detained by the police during the operation, which was launched a year ago.

In December 2003, three companies were found to be inflating their value-added tax invoices to get increased tax rebates, said the official, who declined to be named.

The three firms include a garment firm in Xining, Qinghai Province; Shenzhen's Ordos Industrial Co.; and Jinhua Export and Import Co. in Zhejiang Province.

An investigation revealed that the false invoices were worth 2.8 billion yuan, involving 430 million yuan (US$52 million) in taxes, said the official. He indicated that tax and police officials had obtained 41,167 overstated invoices and tax payment documents.

Tax administrations at various levels across China paid about 420 billion yuan (US$51 billion) in tax rebates for the country's exporters last year, up 106 percent year-on-year, or an increase of 216 billion yuan (US$26 billion).

The figure included 200.0 billion yuan (US$24.2 billion) in delayed tax rebates, which the central government owed to exporters before 2003.

The payment of the tax rebates has increased the cash liquidity of the exporters.

Xie Xuren, director general of the State Administration of Taxation, said on Tuesday that China's total tax revenue hit 2.6 trillion yuan (US$314.1 billion) in 2004, up 25.7 percent year-on-year. The figure, which excludes customs tariffs and agricultural taxes, is a record high.

The administration said that part of the increase was the result of improved efforts by tax bureaus in collecting taxes and cracking down on tax evasion.

(Xinhua News Agency January 14, 2005)