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Our reporter Su Hao and Cao Xueping reported from Beijing

Image source: Official website of Henan Provincial Taxation Bureau of the State Administration of Taxation

On July 19, a self-media platform released a message saying that Henan Qihe Pharmaceutical Co., Ltd. (hereinafter referred to as "Qihe Pharmaceutical"), a wholly-owned subsidiary of Qilu Pharmaceutical Co., Ltd. (hereinafter referred to as "Qilu Pharmaceutical"), was punished by the local tax department for tax evasion.

A reporter from China Business News found out on the official website of the Henan Provincial Taxation Bureau of the State Administration of Taxation that the news originated from an administrative penalty decision (decision document number: Luoshui Erjifa [2024] No. 2) issued on January 8, 2024 by the Second Inspection Bureau of the Luoyang Taxation Bureau of the State Administration of Taxation (hereinafter referred to as "Luoyang Second Inspection Bureau").

The decision pointed out that the Luoyang City Second Inspection Bureau found in its investigation of Qihe Pharmaceutical that the company had engaged in tax evasion in terms of value-added tax, urban maintenance and construction tax, and corporate income tax, and determined that it had violated invoice regulations, with the amount involved reaching 22.8973 million yuan.

According to the first paragraph of Article 63 of the Tax Collection and Management Law of the People's Republic of China, if a taxpayer forges, alters, conceals, or destroys account books or vouchers without authorization, or lists more expenses or no or less income in the account books, or refuses to declare or makes false tax declarations after being notified by the tax authorities, it will be regarded as tax evasion. For taxpayers who evade taxes, the tax authorities will recover the unpaid or underpaid taxes and late payment fees, and impose a fine of not less than 50% and not more than 5 times the unpaid or underpaid taxes; if it constitutes a crime, criminal liability will be pursued in accordance with the law. Based on this, the Second Inspection Bureau of Luoyang City imposed a fine of 1 times the amount of tax evasion on Qihe Pharmaceutical, totaling 22.8973 million yuan.

Industrial and commercial data show that Qihe Pharmaceutical was established in September 2017 and is a wholly-owned subsidiary of Qilu Pharmaceutical. Regarding the authenticity of the incident, the reporter recently asked the head of the public relations department of Qilu Pharmaceutical for confirmation, but as of press time, no response has been received from the company.

Public information shows that Qilu Pharmaceutical is one of the subsidiaries of Qilu Pharmaceutical Group, and its business covers the production of preparations and raw materials for anti-tumor, cardiovascular and cerebrovascular, anti-infection, etc. Qihe Pharmaceutical's main business is drug wholesale, with a registered capital of 10 million yuan. The main management personnel include executive director Wang Yunting, supervisor Li Fumeng, and manager and legal representative Zhao Jianguo.

It is worth noting that Zhao Jianguo is also associated with Anhui Wanhong Pharmaceutical Co., Ltd. (hereinafter referred to as "Anhui Wanhong"), where he serves as general manager and chief financial officer. Anhui Wanhong is also a wholly-owned subsidiary of Qilu Pharmaceutical.

It is worth mentioning that Qihe Pharmaceutical was deregistered as early as May 10, 2021, and it has been 3 years since then.

Although Qihe Pharmaceutical was deregistered three years ago, on May 10, 2023, two years after its deregistration, the Luoyang Second Inspection Bureau still issued a "Tax Inspection Notice" (Luoyang Tax Inspection Bureau Second Inspection Notice [2023] No. 15) to it, announcing that it would inspect the tax-related accounts of Qihe Pharmaceutical from 2018 to 2019.

On September 5, 2023, the Luoyang City Second Inspection Bureau further notified that it had decided to extend the tax inspection period of Qihe Pharmaceutical from 2018-2019 to 2018-2020, for a period of 3 years.

(Editor: Cao Xueping, Reviewer: Tong Haihua, Proofreader: Yan Jingning)