Chapter 1984 - Stamp Tax Case

Or was it a Group Enterprise? An Associated Enterprise? Zeng Juan strained to recall the Australian concepts Directors Zhang and Wang had mentioned in passing during their training sessions. He vaguely understood that Group Enterprises involved something like head shops and branch shops, but Associated Enterprises remained murky. Despite his defection to the Australian cause, Zeng Juan retained the scholar's instinct for research—yet no matter how thoroughly he'd studied the Australian tax system manuals in the Finance and Tax Bureau library, he'd never encountered more than cursory references to these structures. Fool! he cursed himself silently. He'd thought his idea of registering Zhang Yu's two shops separately was very Australian in its sophistication—never imagining he'd so quickly stumble into a pit of his own digging.

"I concede defeat." Zeng Juan spread his hands in resignation. "Ah Yu, you need to pay supplemental tax immediately based on normal selling prices. This collection period just ended, so the late fees and fines shouldn't be too severe... Wait!" A sudden realization struck him. The Finance and Tax Bureau's collection and management regulations specified that trading behavior followed the cash basis principle. "Have you actually delivered the goods yet?!"

"Not yet. Production schedules don't allow it. The orders from our existing customers won't be fully dispatched until month's end." Zhang Yu remained slumped in dejection, still processing the "supplemental tax" verdict.

"Excellent! Perfect!" Hearing the shipments were delayed until next month, Zeng Juan couldn't suppress a laugh, clapping his hands together. "Ah Yu, don't despair. Listen carefully—you must not ship those goods. Find any excuse to delay the customers. Absolutely, under no circumstances, ship anything! According to the bureau chiefs' regulations, income is only recognized when the transaction occurs and payment is collected. As long as you haven't delivered the goods, no transaction has taken place. Without a transaction, they can't re-verify income or calculate additional tax."

"Truly?" Zhang Yu's expression transformed into one of genuine amazement—this kind of clever operation exists?

"Absolutely true. In my assessment, your situation poses no real problem. The liability rests entirely with Master Luo." The prospect of completely clearing his friend's responsibility lifted Zeng Juan's spirits considerably. "I'll submit a report to the division tomorrow morning. We have ten days until month's end—ample time. When the investigation proceeds, simply cooperate fully. They might require you to pay some supplemental Stamp Tax, but that's all."

"Not a problem." Zhang Yu thumped his chest with relief. Though delaying shipments would cost him—particularly the damage to his commercial reputation, which he'd need to compensate with customer discounts later—that was manageable.

"Oh, and you'll need to find a way to void those old shop supply contracts."

Zhang Yu's tension visibly dissipated now that Senate displeasure was no longer a concern. He swirled the tea in his cup with a knowing smile. "That's easily handled. The Finance and Tax Bureau is investigating Noble Gathering—they'll be terrified of implication. Who would dare maintain connections to Luo Zhixiang under such circumstances?"

The following morning, Zeng Juan arrived at the Finance and Tax Bureau early, dark circles prominent beneath his eyes. After signing in, he printed a data access authorization and proceeded directly to the Guangzhou Municipal Government offices. Zeng Juan had always been meticulous by nature, and his daily work with numerical records had only sharpened that trait. Though he felt reasonably confident about what he'd learned at Zhang Yu's residence the previous night, prudence demanded verification. He needed to examine Noble Gathering's registration materials from Guangzhou's first asset clearing—the citywide deed exchange following Liberation—and review the archived land deed copies.

The household investigation report had consumed his thoughts since departing Zhang Yu's home, leaving him nearly sleepless. He'd already drafted several versions.

The facts were straightforward enough. The challenge lay in framing them correctly. Choose well, and Zhang Yu emerged unharmed. Choose poorly, and not only would Zeng Juan be implicated alongside his friend, but Zhang Yu risked losing his Special Supplier designation entirely—a devastating outcome.

He needed to maximize responsibility assignment to the guilty party, deflecting all culpability away from Zhang Yu, while maintaining an unassailable position and speaking with authority. Zeng Juan wracked his brain recalling every scrap of tax knowledge he'd acquired, re-reading the "study materials" issued to cadres until the pages grew worn.

How should he characterize Noble Gathering's flat-price land transfer contract? First principle: absolutely avoid labeling it a yin-yang contract. That characterization implied both buyer and seller knowingly negotiated the deception together—which would implicate Zhang Yu directly. This was a fundamental question of right and wrong; he had to clear Zhang Yu completely.

From Zhang Yu's perspective, signing two contracts represented normal trading practice—one payment stream simply involved supplying goods at cost price as offset. Moreover, Zhang Yu had actively declared the stamps in a timely manner. This demonstrated that subjectively, he'd harbored no intent to deceive the Senate—any contractual irregularities stemmed purely from insufficient understanding of Senate laws.

As for Noble Gathering, clearing Zhang Yu meant they had to carry the entire burden. Furthermore, Advisor Liao had handled all contract drafts—subjective intent couldn't be disputed there.

Calculating this way, since Director Nan's initial tip concerned only Noble Gathering's abnormal declaration, and the team's investigation had examined only the land trading contract, the optimal strategy was to beat them at their own game. In the report, he would make absolutely no mention of the Zhang Family Old Shop contracts. Discussing only the established facts, he'd state merely that Luo Zhixiang's Noble Gathering had sold land at prices obviously below fair market value, constituting suspected tax evasion. As for the second contract that subsequent inspection would inevitably uncover, Zeng Juan had devised two escape routes for Zhang Yu. Option one: have Zhang Yu immediately sign an entrusted supply agreement between Great World and the old shop. The agreement would essentially copy the old shop's contracts with various establishments—no need for excessive formality—but must specify supply at market prices. Additionally, include a clause stating this agreement was established to repay Great World's land trading profit. Option two: add a specific accrued tax liability to the old shop's accounts, noting the Circulation Tax payable calculated at market price for the first goods batch. Either approach would demonstrate Zhang Yu's tax compliance and absence of deceptive intent. Regardless, actual transactions would terminate once the Finance and Tax Bureau investigation commenced, so Zhang Yu would suffer no substantive losses.

In the Great Ming tradition, shop and home were inseparable. Even with separate registration, a father paying debts for his son was perfectly justified. Bureau leadership would surely understand—as long as no tax revenue leaked, at worst they'd issue a mild reprimand about future compliance. This practice resembled what the Australians called General Contract Subcontracting, didn't it? Whatever the terminology, Zeng Juan thought, rubbing his dark circles. As long as Zhang Yu navigated this crisis safely, the mental and physical toll of these past two days would be worthwhile.

Zeng Juan felt confident that if his report emphasized Noble Gathering's land trading price discrepancies, the Finance and Tax Bureau would most likely require price re-verification, mandate contract re-establishment and tax supplementation, while simultaneously voiding the old shop contracts. Zhang Yu occupied the passive position and had "accrued" taxes in the accounts according to the old shop contract. Both emotionally and logically, he should face no punishment.

The municipal archives yielded exactly what Zhang Yu had provided—no discrepancies. Zeng Juan's confidence solidified. Returning to the office, he immediately began drafting the report, completing it before the afternoon's end. He specifically marked it as Urgent-Warning, secured signatures from all team members, and submitted it to the Management Division. What followed was beyond his control.

A week later, just as the workday began, Zeng Juan received notification to attend a meeting in the second-floor small conference room at nine o'clock, with instructions to prepare Noble Gathering materials in advance. Learning that leadership wished to "discuss" the Luo family matter with him sent cold sweat down his spine. For the hour preceding the meeting, he did little beyond re-reading Noble Gathering's files and his own investigation report. He drank three full cups of water, making repeated trips to the toilet that drew sidelong glances from colleagues.

Finally, at 8:50, Zeng Juan headed upstairs to the conference room. He took several deep breaths—a calming technique from Australian manuals—before knocking with trembling hand.

"Come in!" Director Ai's voice. This matter must be significant—why else would the Director personally summon me? Zeng Juan's chest tightened.

Despite his exhaustive efforts—the regulation-combing, the document-scouring, the elaborately crafted "seamless" report—he understood the fundamental reality: the Australians set the rules. The Senator Chiefs, by traditional reckoning, were all "veteran officials of pen and sword." Their familiarity with these systems exceeded his own by orders of magnitude. If they identified some critical loophole he'd missed, neither he nor Zhang Yu would escape unscathed.

Pushing the door open, Zeng Juan found the conference room sparsely populated. Only Director Ai, Director Wang, and Inspection Division Chief Li Fulai were present, along with... Huang Ping and Yao Yulan? Zeng Juan couldn't decipher the significance. He announced his arrival formally, then took a seat near the door at Wang Qiyi's gesture.

"Excellent, everyone's here. Let's dispense with preliminaries." Ai Zhixin's directness was characteristic. "This meeting has one purpose: discussing the abnormal Stamp Tax declaration from Noble Gathering that Team Leader Zeng reported last week. Chief Li Fulai will brief us on the case details."

Li Fulai distributed files to everyone present, then began outlining the investigation's findings from the past four days. Contrary to Zeng Juan's expectations, Noble Gathering was far from a simple north-south commodities trader. Though possessing few assets under its own name, the establishment's shareholding structure was labyrinthine, involving connections to major households throughout the city—particularly the Lin Zunxiu family.

"I should clarify," Li Fulai added, "Lin Zunxiu appears on the Political Security Bureau's 'Guangzhou City Key Observation List.' Additionally, several reactionary gentry we eliminated during the Witchcraft Case show up in this firm's transaction records. Though not official shareholders, the connections are unmistakable."

He continued explaining that Noble Gathering's accounts were catastrophically disorganized. Not only had they failed to implement formal Australian bookkeeping, but even traditional Four Pillars Balancing ledgers were maintained haphazardly. Beyond extensive receivables on account, numerous transactions violated basic commercial logic. Though solid evidence remained elusive, the bureau chiefs inferred the existence of massive IOU current accounts, off-book records, even purely oral agreements. In Director Wang's words, this was a "white glove" operation—a shell through which tax evasion far exceeding the firm's total capitalization could be conducted.

Li Fulai spoke unhurriedly, his measured pace deliberate. Yet Zeng Juan's nerves went taut. The Division Chief's characterization carried weight. This opening clearly signaled preparation for a major case!

(End of Chapter)