New Zealand businesses are being warned against using electronic suppression software (ESS) tools to understate their income and pay lower taxes in the wake of raids in Australia, the United States and the United Kingdom on businesses suspected of supplying and using the illegal tools.
Tony Morris, an Inland Revenue Department spokesman, said the tools pose a significant threat to the integrity of the tax system and there are severe consequences for those who use them.
“These tools create the electronic version of two sets of books. Using this software amounts to tax evasion and an aggressive form of tax evasion at that.”
The tools allow point-of-sales data collected by a business to be understated or concealed so that less or no tax is paid on the income generated.
That could mean a customer orders a $60 steak and $100 bottle of wine and the software tool then puts it through the point-of-sale system as a $10 bowl of chips and a $4 bottle of soft drink.