The executive allegedly concealed over $820,000 in revenue, falsified invoices, and illegally exported rare earth materials to avoid taxes.

Between 2019 and 2023, Tuan and his associates manipulated financial records, allowing his company to export rare earth oxides with a 0% tax rate, causing significant financial damage to the state.

Hiding revenue and inflating expenses

According to the investigation, between 2019 and 2023, Luu Anh Tuan purchased rare earth ore (TREO content from 18% to 20%) from Doan Van Huan, Chairman of Thai Duong Company.

However, Huan only issued invoices for a fraction of the rare earth sold, leaving a large portion undocumented.

Tuan then processed the raw materials into "total rare earth oxides" with TREO content of 95%-97% and instructed his employees to falsely declare these exports as products derived from imported materials, enabling them to bypass export taxes.

In 2022, Vietnam Rare Earth Company saw a surge in revenue and profit due to the tax-free exports. However, most of the raw materials sourced from Thai Duong Company lacked official invoices, making it difficult to account for legitimate production costs.

To disguise this, Tuan ordered his subordinates to acquire fraudulent invoices from chemical suppliers, including Kim Nguu, Minh Tien, and Song Ma companies. These suppliers issued 15 fake invoices, amounting to over $650,000, for transactions that never actually took place.

To legitimize the fraudulent invoices, Deputy General Director Do Hanh Huong approved payment requests, after which Tuan signed off on money transfers from Vietnam Rare Earth Company to the suppliers.

These companies withdrew the funds, kept a portion for tax-related costs, and returned the remaining amount to Tuan’s company, either as cash or through employee accounts.

Tax losses and illegal exports

Authorities found that 14 out of the 15 fraudulent invoices were used to reduce taxable income, saving the company over $113,000 in corporate income tax.

Additionally, all 15 invoices were used for value-added tax (VAT) deductions, falsely increasing VAT refunds by over $14,000 and reducing payable VAT by $33,000.

These fraudulent activities resulted in an estimated tax loss of over $460,000 for the government.

Investigators also revealed that Tuan abused his company's import privileges to further evade taxes. Vietnam Rare Earth Company was authorized to import raw materials from Chinese suppliers under E31 regulations (import for manufacturing and re-export).

However, Tuan falsely declared domestically sourced raw materials as imported goods, enabling his company to export final products under E62 regulations (which grant tax exemptions for re-exports).

Between 2019 and 2023, Vietnam Rare Earth Company falsely declared 63 export shipments, smuggling nearly 475 tons of total rare earth oxides worth $15.3 million.

The case highlights systematic tax evasion and fraud within Vietnam’s rare earth industry, a sector of strategic importance for global supply chains.

Authorities are continuing investigations into potential accomplices, including companies that facilitated fraudulent invoicing and export documentation.

If convicted, Luu Anh Tuan and his associates could face severe penalties, including criminal charges for tax evasion, document forgery, and illegal exports.

T. Nhung