Canada’s tax agency alleged that Iris Technologies Inc. (Iristel) was involved in a carousel tax scheme, according to a CBC The Fifth Estate investigation summarized by MobileSyrup. That is an allegation, not a finding that Iristel committed fraud. Iristel CEO Samer Bishay denied wrongdoing, and the company separately accused the Canada Revenue Agency (CRA) of misconduct in a civil lawsuit.
What did CRA allege about Iristel?
MobileSyrup’s November 27, 2023 account of CBC’s The Fifth Estate investigation reported that the CRA alleged Iristel “knew or was wilfully blind” to a carousel scheme. The figures and transaction details below are attributed to that investigation as summarized by MobileSyrup; the underlying records are not independently authenticated here.
- The report said CRA released $63 million in refunds to Iris Technologies between July 2018 and August 2019 after an audit was ended.
- It said the audit was reopened after the company claimed $86 million in refunds in September 2019.
- According to the report, records showed Iristel’s TeleEscrow account received payments worth US$600 million between October 2019 and March 2020. MobileSyrup said the money came from LDI Networks, described the flow as circular, and reported that the activity led to tens of millions of dollars in additional tax-refund claims that were denied.
MobileSyrup also reported that LDI CEO Louis Arriola introduced Iristel to TeleEscrow and identified Arriola as a convicted fraudster. Bishay told CBC he did not know Arriola’s past or business connections. The reported account does not establish that Iristel knew about or participated in fraud.
What is a carousel tax scheme?
CRA’s general explanation describes a carousel as a circular, sometimes fabricated, supply chain in which entities sell goods to one another or create the appearance of sales. The agency says the name comes from “the circular manner in which the transactions flow through a fabricated supply chain.”
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In one possible pattern, a “missing trader” charges GST/HST to a buyer but does not remit that tax to the government. Another participant, sometimes called a “zero-rater,” may claim input tax credits after purported offshore sales or a change in the supply’s taxable status. In combination, unremitted tax and credit claims can create tax leakage. This is CRA’s general description of the mechanism, not proof that every element occurred in Iristel’s case. CRA: Carousel schemes
How did Iristel respond?
Bishay denied the allegations in the CBC account and disputed the characterization of the transactions. MobileSyrup attributed to him the statement that the activity CRA alleged was “nothing more than the hallmarks of our industry,” which he said the agency had labeled as fraud. He also said he did not know who Arriola was connected to.
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Iristel also took legal action. In an April 12, 2022 press release, the company said it had filed a statement of claim in Federal Court against CRA and four agents, seeking $250 million. Iristel alleged that CRA withheld more than $80 million in GST refunds and misused its audit powers; MobileSyrup reported that the suit included claims of misrepresentation, misfeasance in public office, abuse of process and negligence. Those are the company’s allegations, not court findings. Iristel’s April 12, 2022 announcement
Has a court found Iristel committed fraud?
The cited accounts do not establish a criminal conviction of Iristel or a final court ruling on the dispute. They also do not establish the current procedural status or final outcome of the company’s lawsuit. A reported CRA allegation, a refund denial, or a civil claim is not itself a criminal conviction or a court’s decision on the merits.
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Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How much money was involved?
The amounts refer to different things: reported refunds released or claimed, payments through an account, and amounts sought or alleged in the lawsuit. They should not be treated as a single measure of proven loss or liability.
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| Amount | What it refers to |
|---|---|
| $63 million | Refunds CRA reportedly released to Iris Technologies from July 2018 to August 2019, according to CBC’s investigation as summarized by MobileSyrup in 2023. |
| $86 million | Refund claims the company reportedly made in September 2019, according to the same account. |
| US$600 million | Payments the investigation reportedly found had passed through Iristel’s TeleEscrow account between October 2019 and March 2020; this is a reported payment total, not a stated tax loss. |
| $250 million | Damages Iristel said it sought in its 2022 statement of claim; it is not an award. |
| More than $80 million | GST refunds Iristel alleged CRA withheld, as stated in the company’s 2022 press release. |
CRA’s 2024 public page also said it identified approximately $1.5 billion in unwarranted GST/HST refunds and rebates annually and more than $1.1 billion through carousel-scheme audits since 2017–2018. Those are broad agency figures, not amounts specific to Iristel.
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