- The Canada Revenue Agency (CRA) is cracking down on GST/HST carousel schemes, where businesses collude to set up a fake supply chain to collect GST/HST refunds.
- Innocent businesses may be caught up in these investigations, leading to devastating effects on their cash flow.
- Carousel frauds are more common in Eastern Europe, but have become a bigger problem in Canada, particularly in industries such as scrap gold and refined precious metals, software, media, and telecommunications.
- Recent instances of GST/HST carousel schemes include a UK-based scheme that attempted to obtain $52M in Canadian tax refunds, and a targeted effort by the CRA that saved the Canadian government $526.4M.
Source Jeremy Scott
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