Schedule “NINTH SCHEDULE

Section 20(2C)Illustrations of arrangements for purposes of Section 20(2A)Illustration 1 — Missing trader in supply chainPersons A, B and C are registered under this Act. Person A supplies goods to Person B at a price that includes tax chargeable on the supply. Person B supplies the same goods to Person C at a higher price (to earn a profit margin for Person B) that includes tax chargeable on the supply. Person C exports the goods to an overseas Person D at a price that does not include tax chargeable on the supply to Person D (on the basis that an export of goods would be a zero-rated supply).Person C claims a refund for the input tax paid to Person B and Person B accounts for the output tax on Person B’s supply to Person C (less the input tax paid to Person A). Person A fails to account for the output tax on Person A’s supply to Person B and becomes untraceable.The arrangement causes loss of public revenue as a refund is made to Person C while Person A does not account for the output tax due from Person A.This illustration applies equally to a supply of services, and if there are 2 or more intermediaries in the supply chain between Person A and Person C.Illustration 2 — Obstruction and obfuscation by intermediaryPersons A, B and C are registered under this Act. Person A supplies goods to Person B at a price that includes tax chargeable on the supply. Person B supplies the same goods to Person C at a higher price (to earn a profit margin for Person B) that includes tax chargeable on the supply. Person C exports the goods to an overseas Person D at a price that does not include tax chargeable on the supply to Person D (on the basis that an export of goods would be a zero-rated supply).Person C claims a refund for the input tax paid to Person B and Person B accounts for the output tax on Person B’s supply to Person C (less the input tax paid to Person A). Person A fails to account for the output tax on Person A’s supply to Person B, and Person B obfuscates the identity of Person A (for instance, by Person B becoming untraceable or keeping poor records).The arrangement causes loss of public revenue as a refund is made to Person C while Person A does not account for the output tax due from Person A.This illustration applies equally to a supply of services, and if there are 2 or more intermediaries in the supply chain between Person A and Person C.Illustration 3 — Inflation of value of supplyPersons A, B and C are registered under this Act. Person A supplies goods to Person B at a price that includes tax chargeable on the supply. Person B supplies the same goods to Person C at a higher price (to earn a profit margin for Person B) that includes tax chargeable on the supply. Person C exports the goods to an overseas Person D at a price that does not include tax chargeable on the supply to Person D (on the basis that an export of goods would be a zero-rated supply).The price charged by Person A to Person B for the goods is grossly excessive because the goods are counterfeit, of a poorer quality than described in the supply, or of a lower quantity than described in the supply.Person C claims a refund for the input tax paid to Person B and Person B accounts for the output tax on Person B’s supply to Person C (less the input tax paid to Person A). Given the inflated value of the goods, the refund is larger than what would otherwise be given. Person A fails to account for the output tax on Person A’s supply to Person B, and it is not possible to recover the output tax from Person A (for instance, because Person A has little assets).The arrangement causes loss of public revenue as, firstly, the refund to Person C is excessive, and, secondly, a refund is made to Person C while Person A does not account for the output tax due from Person A.This illustration applies equally to a supply of services, and if there are 2 or more intermediaries in the supply chain between Person A and Person C.Illustration 4 — Offsetting input tax against tax on supplies made in another supply chainPersons A, B and C are registered under this Act. Person A supplies goods to Person B at a price that includes tax chargeable on the supply. Person B supplies the same goods to Person C at a higher price (to earn a profit margin for Person B) that includes tax chargeable on the supply. Person C exports the goods to an overseas Person D at a price that does not include tax chargeable on the supply to Person D (on the basis that an export of goods would be a zero-rated supply).Person C sets off the input tax paid to Person B against the output tax charged on other supplies made to Person E (who is registered under this Act) to reduce the amount of the output tax otherwise payable by Person C to the Comptroller.Person B accounts for the output tax on Person B’s supply to Person C (less the input tax paid to Person A). Person A fails to account for the output tax on Person A’s supply to Person B and it is not possible to recover the output tax from Person A.The arrangement causes loss of public revenue as Person C has reduced the amount of the output tax otherwise payable by Person C to the Comptroller when Person C sets off the input tax paid to Person B against the output tax charged on other supplies made to Person E, while Person A does not account for the output tax due from Person A.This illustration applies equally to a supply of services, and if there are 2 or more intermediaries in the supply chain between Person A and Person C.Illustration 5 — Assumption of identity of traderPerson A is not registered under this Act. Persons B, C and D are registered under this Act. Person A supplies goods to Person B using Person D’s registration details, at a price that includes tax chargeable on the supply. Person B supplies the same goods to Person C at a higher price (to earn a profit margin for Person B) that includes tax chargeable on the supply. Person C exports the goods to an overseas Person E at a price that does not include tax chargeable on the supply to Person E (on the basis that an export of goods would be a zero‑rated supply).Person C claims a refund for the input tax paid to Person B and Person B accounts for the output tax on Person B’s supply to Person C (less the input tax paid to Person A).The arrangement causes loss of public revenue as a refund is made to Person C while Person D does not account for any output tax to the Comptroller since Person D did not actually make the supply of goods to Person B.This illustration applies equally to a supply of services, and if there are 2 or more intermediaries in the supply chain between Person A and Person C.”.