Chapter 1983 - Yin-Yang Contract

Though the Zhang Family Old Shop had rebranded as "Zhang Family Old Shop Food Company" and purchased a separate residence—ending centuries of "home and shop combined" living—old habits proved stubborn. Zhang Yu's parents remained uneasy without the shop's proximity. Their new house sat barely half an alley away, close enough to reach "upon lifting a leg," as the saying went.

The residence itself was larger and newer than their previous quarters. But Master Zhang remained an old-fashioned businessman at heart—even as prosperity grew, he disdained ostentation. Beyond hiring additional staff for lodging and meals, plus two women for laundry and cooking, the household maintained its modest character. When Zhang Yu returned late, as he often did, leftover rice sufficed.

Lamps were already lit when Zeng Juan arrived at the Zhang residence that evening. Zhang Yu had just returned from outside the city walls and was settling into his dinner. Seeing his visitor, he immediately moved to invite him to the table.

"No need," Zeng Juan cut him off, practically vibrating with urgency. "I've eaten. You finish quickly—I need to ask you about something important!"

Zhang Yu startled, uncertain what could drive his "old friend" to such agitation. His mind jumped to the counterfeit bill incident from the Purple Light Pavilion gathering days ago—could there be some hidden complication? But the cashier had assured him that confiscating the fraudulent note concluded the matter.

He stammered out the question. "Ah Juan, is this about the fake money? I truly don't know where that note came from..."

Zeng Juan blinked. "What fake money?"

"From the other day at Purple Light Pavilion..." Zhang Yu recounted the entire episode. "Is there some procedure I need to handle?"

Hearing this, Zeng Juan exhaled with relief. "Counterfeit currency falls under Police Bureau jurisdiction. I'm here about taxes! Taxes!"

"What about taxes?" The shift in topic reassured Zhang Yu considerably. If this concerned tax matters, he felt confident—he'd already instructed Zhang Ting and the others to handle the second quarter payments, and all relevant receipts had been properly filed. He'd maintained scrupulous compliance with Australian regulations, following every requirement to the letter. The Tax Bureau couldn't possibly find fault with his accounts.

"We paid on time and in full. Our tax declarations concealed nothing—you know that yourself..."

"I know!" Zeng Juan's expression remained grave. "But what I uncovered today is deeply suspicious. If you're not careful, your entire family could be implicated!" He gestured sharply. "Just eat. When you're finished, bring me your account books and contract drafts immediately!"

The seriousness in his tone jolted Zhang Yu into action. He wolfed down the remaining food in hasty bites, then led Zeng Juan to the shop.

The accounting room housed both ledgers and contract documents. Though the Zhang family businesses had split, establishing separate books and cashiers, they still shared a single accountant—trained professionals in Australian bookkeeping methods remained scarce. Consequently, records for both companies resided in the old shop's accounting office.

"Bring out the contract draft for your land transaction with Noble Gathering," Zeng Juan instructed, turning the kerosene lamp to maximum brightness. "And all vouchers related to that purchase."

Contract texts, receipts, and ledgers were organized by category. Zhang Yu quickly located the requested file from the shelves—everything neatly arranged, labels carefully affixed with paste.

As Zeng Juan examined the draft, his expression grew increasingly dark. Though the original contract wasn't present, the final draft revealed enough. Zhang Yu watched his friend flip through the pages with mounting unease, wondering why he'd demand these documents so urgently without even a proper greeting. He'd paid full tax based on the documented transaction value and affixed all required stamps—nothing had been overlooked.

Finally, after what felt like an eternity, Zeng Juan spoke.

"Ah Yu. Tell me honestly—did the Luo family sell you this land at fair market price?"

When Zhang Yu revealed the land's registered asset value was 300 yuan, Zeng Juan's heart sank.

"Ah Juan, are you joking?" Zhang Yu's laugh held genuine incredulity. "Is Master Luo such an easy mark? The 300 yuan is the surface price—the actual terms include twenty-five percent interest. I only secured those terms by leveraging my status as Senate Special Supplier. Otherwise he wouldn't have dared..."

"Fool! Absolute fool!" Zeng Juan slammed his palm on the table and shot to his feet. "This is a yin-yang contract! Off-book accounts! Do you honestly think the Finance and Tax Bureau employs the same corrupt clerks as the old regime? Do you realize what penalties the collection and management regulations prescribe for this—"

Zhang Yu visibly recoiled from the outburst, sitting frozen until the mention of punishment finally penetrated his shock.

"Ah Juan, Ah Juan, please—let me explain!" Zhang Yu forcibly pushed his friend back into the chair, then dragged a small stool close and pressed a teacup into his hands. Once Zeng Juan had drunk and calmed somewhat, he continued. "Of course I wouldn't engage in such schemes. We're all Senate people—do you think I don't understand basic propriety? Master Luo and I made a separate arrangement for that twenty-five percent. No cash changes hands. You know my Great World shop is operating at full capacity producing military rations. Only this old shop can manufacture those Australian delicacies—'Cookies,' 'Cakes,' and such. Demand far exceeds our production. Master Luo targeted precisely that product line from this old shop. He provided me a list of establishments, requesting regular-price supply to those shops to offset the payment. Nothing improper in that arrangement, surely?" Zhang Yu raised his eyes hopefully.

"Seems... not..." Zeng Juan sensed something amiss but couldn't quite articulate it. "You have a contract for this as well?"

"Naturally." Zhang Yu thumped his chest with confidence. "My father's contract was also my work. If you need to examine it, I can retrieve it. But the contract isn't with Master Luo—it's with each individual shop."

"With each shop?"

"Correct. The ones the old shop supplies—we signed separate documents with each establishment. Master Luo insisted on this arrangement. He even reduced the interest by half a percent. As the buyer, I could hardly object." Seeing Zeng Juan's face begin to redden again, Zhang Yu hastily added, "Ah Juan, rest assured—all those documents bear proper stamps! Not a cent less in Senate taxes." He rose to fetch the contracts and tax receipts.

"Only stamp taxes?" Zeng Juan examined the documents Zhang Yu retrieved.

"Of course? What else would there be?" Zhang Yu looked genuinely confused. "Land purchases only require Stamp Tax, don't they?"

"But you're supplying goods to shops—that constitutes sales activity. Where's the Circulation Tax?"

"Ah Juan, what are you saying!" The suggestion that he should pay Circulation Tax on the land purchase clearly rankled. "I'm the buyer—the buyer! My goods offset the payment; they're not sold for profit. Whoever profits pays tax. Master Luo selling the land should pay tax on this transaction. What logic demands the land buyer pay as well? Besides..." Seeing Zeng Juan prepare to argue, Zhang Yu snatched the contract back and jabbed at specific clauses. "Look carefully. This document contains not a single phrase indicating my goods are sold for money. Even if you wanted to collect my tax, on what basis?"

Zeng Juan took the contract and read each clause with painstaking attention. The document stipulated Zhang Family Old Shop's supply quantities, timing, frequency, quality standards—but indeed, not one sentence referenced pricing or payment offset. Truly cunning work. Under the glow of the Australian oil lamp, Zhang Yu's unconvinced expression gave Zeng Juan pause. He wasn't certain whether his silent curse targeted Master Luo or his friend.

But friendship demanded honesty. Zeng Juan felt obligated to explain the situation properly. In truth, Master Luo had executed this scheme with considerable brilliance. Under the old system, such arrangements would certainly have passed undetected, convenient for all parties. Small wonder Zhang Yu had missed the trap—when it came to financial manipulation, who could match the cunning of accountants serving wealthy households?

Yet Zeng Juan knew Director Ai was looking to "catch a chicken" for the Inspection Bureau to practice on. Given his understanding of the Senate's methods, matters had progressed too far—with documentation this concrete, even if Zeng Juan didn't report it, subsequent audits would inevitably ensnare Zhang Yu. The recognition settled his nerves somewhat. He took a long draught of water, soothing his anxiety-parched throat, before speaking slowly. "Ah Yu, if you consider me your brother, don't hide anything. Whose idea was this arrangement?"

"Ah Juan, you know my family's background—small business, barely keeping our heads above water. Where would we acquire such sophistication? This was all arranged by Noble Gathering's accountant, Advisor Liao. Why—is there a problem?" Zeng Juan's change in tone made Zhang Yu distinctly nervous.

"Finance and Tax Bureau regulations: income from transactions conducted at prices obviously below fair market value cannot be used as the tax basis. Your old shop providing goods without charge still constitutes sales and should be taxed based on prevailing market prices..."

"No, no, Ah Juan, listen—I'm buying land. The old shop's goods represent the interest payment. I truly receive not a penny for those supplies. The one profiting is Noble Gathering... Did he set me up?!"

"Not exactly..." Zeng Juan doubted Luo Zhixiang would dare deliberately trap someone bearing the Senate Special Supplier designation. Besides, the offense's exact nature remained undetermined—no need to terrify his friend excessively. "He signed separate documents purely to reduce expenses, pay less tax. An old trick!"

Zeng Juan had studied the Ming Dynasty Tax Data Compilation in the Finance and Tax Bureau library and listened to veteran clerks reminisce. He recognized this as the customary yin-yang contract scheme. That Luo Zhixiang had listed the transaction at parity value actually showed considerable respect for the Senate—traditional Ming practice would consider one-tenth the actual price generous in a contract.

"Then what do I do?" Zhang Yu's panic was palpable. Just days ago he'd pledged absolute loyalty to the Senate—sworn to be their faithful running dog, though he'd phrased it more diplomatically as "subject." Now here he was, unwittingly undermining Senate finances. Losing money on back taxes was negligible; forfeiting the Senators' trust could destroy everything. Zhang Yu's entire fortune depended on that relationship.

What to do indeed? On the surface, Luo Zhixiang's intent was straightforward tax evasion through separated contracts—a tactic rendered useless under Senate governance. But in practical terms, because Zhang Yu's family had registered the new and old shops separately, the current fiscal system actually complicated matters in his favor. If the two shops shared ownership, Zeng Juan reflected, they could simply attach the old shop's contract as an appendix to the primary document. Combining them would barely qualify as market-price trading—at worst, the old shop's transaction price could be deemed inadequately specified. But Zhang Family's two establishments didn't even share the same legal representative. Zhang Yu, in his scrupulous honesty, had let his father sign and seal the old shop's contract. That avenue was closed.

(End of Chapter)