China Tax Authorities Rattle Metal Market With Invoice Crackdown

A sweeping crackdown by China’s tax authorities is rattling traders in the world’s biggest metals market, with many firms grappling with severe reductions in invoicing quotas that underpin their trading activities.

China has stepped up its scrutiny of so-called circular invoicing deals, where related parties execute trades between themselves and use the invoices to obtain bank funding. The State Taxation Administration said on Friday that it has intensified oversight of the practice to target fraudulent trading activity that has artificially inflated economic growth.

The probe has ensnared a broad group of traders dealing in copper, aluminum and silver in Shanghai, ...