Tax Accounting Fraud – A Chinese Way of Life

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This article describes how businesses in China have to give out invoices called fapiao in order to ensure that taxes are being paid. However, as you will learn from Mr. Ding’s experience, the fapiao or the very mechanism intended to keep businesses honest, is the key to cheating on taxes.

Questions:
1. What was the challenge that the accountant at Mr. Ding’s workplace posed; what was his plan; and why was it so hard to accomplish?
2. What was the status of fake invoices in China in 2010?
3. Why was Mr. Ding both a villain and a hero in this story?
4. What did the 2011 audit of the Beijing-Shanghai high-speed railway construction project find?

Source:
Ding, G. (2015). How to Cheat on Taxes in China. The New York Times, Sep. 11 (Retrievable online at http://www.nytimes.com/2015/09/11/opinion/how-to-cheat-on-taxes-in-china.html)