Investigation Bureau inspectors on Friday detained members of what they said was a criminal ring suspected of colluding with operators of jewelry and handicraft stores to evade sales taxes when using China UnionPay credit cards.
The inspectors said the ring did this by installing fake card readers in the stores, located mostly at popular tourist attractions, that transmitted sales information to the suspects rather than to the National Credit Card Center.
Acting on tip-offs, more than 100 bureau inspectors raided 21 businesses nationwide on Thursday, seizing suspected illegal earnings of more than NT$11 million (US$379,000) in cash and relevant documents, the bureau’s Kaohsiung Investigation Branch said.
Seventy people allegedly involved in the case were also -subpoenaed to report to the branch for questioning.
Investigation Bureau inspectors said the raided stores were suspected of evading taxes by coordinating with the criminal ring, which installed electronic point-of-sale machines that connected with computer servers at the ring’s Hong Kong-based company, which is unlicensed.
Information for sales paid for with UnionPay credit cards, which are widely issued in China, would be immediately transmitted to computers at the Hong Kong-based company, which would then send the transaction information to the Guangzhou UnionPay Payment Network Co to acquire an access code, the inspectors said.
Once they had obtained the code, it would be transmitted back to the suspects’ company and then to the store in Taiwan, where the transaction would be completed, investigators said. After clearing the transaction, the Guangzhou UnionPay Payment Network would transfer the money to the bank account of the suspects’ company, from where it would be transferred to the bank accounts of the colluding stores through an underground money transfer system.
The ring was found to have processed more than NT$3 billion in credit card payments last year. Through the process, it could skim off about NT$150 million in the form of business taxes that should have gone to the government, the inspectors said.
Because of the seriousness of the case, which might involve more than 200 local stores, the scale of the investigation has been expanded and it has been taken over by the Kaohsiung District Prosecutors’ Office, they added.