A recent report has surfaced regarding a top pharmaceutical company allegedly collaborating with a service platform to fraudulently issue invoices totaling 13.51 billion yuan. According to verification by China Business News, this information stems from a judgment document on invoice fraud published on the China Judgments Online platform.
The shocking details reveal that between December 2019 and September 2021, Chao Hu Yi Tong Tian Xia Health Consulting Co., Ltd. issued 13,925 fraudulent VAT invoices to Qilu Pharmaceutical Co., Ltd. and its affiliates without any actual transactions, totaling 13.51 billion yuan.
The judgment document, formally titled the Criminal Judgment on Zhao's Fraudulent Issuance of Special VAT Invoices for Export Tax Rebate and Tax Deduction, was issued on September 13, 2024, and became available on December 3, 2024.
Attempts to verify the matter with Qilu Pharmaceutical were unsuccessful as of the time of publication.
The judgment outlines how Chao Hu Yi Tong Tian Xia issued these invoices fraudulently. Originally, the Yi Tong Tian Xia website functioned as a B2B platform for pharmaceutical companies and medical institutions. Founded in 2014 by Feng Moxin, the company later registered Chao Hu Yi Tong Tian Xia in 2018 to facilitate financial misappropriation with Qilu Pharmaceutical.
The defendant, Zhao, joined Beijing Yi Tong Tian Xia in March 2019 and became the operations director by December 2019. Under Zhao’s management, Qilu Pharmaceutical provided identity information for over 300 employees to establish multiple individual businesses in Chao Hu, which were then used to issue invoices without any actual drug promotion or transactions.
From December 2019 to September 2021, Chao Hu Yi Tong Tian Xia generated 13,925 VAT invoices totaling 12.75 billion yuan in fraudulent transactions, resulting in tax amounts of 76.48 million yuan and a total of 13.51 billion yuan. Zhao gained over 100,000 yuan in illegal profits but received a sentence of three years imprisonment, suspended for three years, along with a fine of 50,000 yuan.
Chao Hu Yi Tong Tian Xia was revoked in February 2024, and the company’s practices, including high invoice charges compared to market rates, reflect a pattern of abuse where inflated prices ultimately burden patients and healthcare funds.
According to Article 205 of the Criminal Law of the People’s Republic of China, the fraudulent issuance of VAT invoices can lead to severe penalties, including over ten years of imprisonment for individuals involved.
In January 2019, Beijing Yi Tong Tian Xia signed a contract with the Chao Hu municipal government to establish an industrial park, projecting significant economic benefits. However, discrepancies in project details and the site’s current use as an automotive parts company raise questions about the legitimacy of the operations.
Similar fraudulent activities have been reported in other pharmaceutical enterprises, suggesting a systemic issue in the industry. A 2021 announcement by the Ministry of Finance indicated that multiple pharmaceutical companies faced administrative penalties for using fake invoices, hinting at widespread malpractice across the sector.
