Now, China accuses Google of tax fraud

American search engine Google, which recently accused the Chinese government of blocking its services, has been charged with tax evasion along with three of its affiliate companies.

Three Google-affiliated companies have been found using fake invoices and accounting and business tax irregularities were also discovered that involved more than 40 million yuan ($ 6.06 million), the state-run Economic Daily reported on Thursday, citing sources in China's tax authority.

Google itself is under investigation for tax evasion, it said. The authority has asked the companies to correct their wrong-doing and has retrieved the money, the daily's report being circulated by the official Xinhua news agency said.

In October, 2007, two Google-affiliated companies registered in Beijing were investigated for tax evasion involving more than 20 million yuan.

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The news of the tax cases came about ten days after Google accused the Chinese government of "blocking" its services, while making it appear as if it is a technical problem.

The American search engine, which patched up with the Chinese government after a prolonged wrangle last year over periodic interference of its content by intrusive censors, said that investigations carried out by it to look into recent disruptions revealed there was no technical problem.

"There is no issue on our side; we have checked extensively. This is a government blockage, carefully designed to look like the problem is with Gmail," it said in a statement issued in Beijing on March 21.

Google's Internet and e-mail services went haywire ever since the "Jasmine" uprisings in Tunisia and Egypt last month, which subsequently spread to several other Gulf countries.

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While China blocked all information relating to these protests in Chinese language Internet services, used by over 457 million people, Google and Gmail services experienced periodic disruptions after overseas Chinese dissident groups started calling for similar protests in Chinese cities, which were put down with an iron hand by the Chinese police.

Google, which had 35 per cent of the Chinese market before it moved its search engine over to Hong Kong following a spat with the government, managed to return to the Chinese market this year after obtaining a new licence accepting the stringent censorship rules governing the Internet in China.

Google's return was largely attributed to the lure of the burgeoning Chinese Internet market, which has emerged world's largest, with over 457 million connections.

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The Chinese government appears increasingly cagey over the speed with which Internet has spread as it has quickly emerged as a new media threatening the relevance of the tightly controlled official media.

According to recent reports, China has over 100 million microbloggers, who managed to establish networks of their own despite a ban on social network websites like Twitter and Facebook.

Most of the Chinese bloggers are hooked on to Chinese messaging networks like Tencent QQ, generally referred to as QQ, which has millions of accounts, making authorities apprehend that the fast spreading Internet and microblogging networks could be used by dissidents to challenge the one-party political system.