Sep 03, 2022 - 07:09 PM
The ongoing US-China trade war is taking a heavy toll on both economies seeing that China increased its tariffs on US exports by 21.2% while America raised its tariffs on Chinese products by 19.3%. It’s even gotten so bad that a former US ambassador stated that removing sanctions from China could reduce US inflation by 1% and raise consumer trust in the US government.
But while both governments continue their trade wars, small businesses and eCommerce entrepreneurs are left with the burden of figuring out how to navigate this challenge.
Unlike most international corporations that can move their supply chains, use bonded warehouses, trade zones, or apply for exemption, eCommerce merchants have to think of creative ways to reduce the sting of sanctions. And this is where using two sets of invoices comes in.The Case of Double Invoicing
An invoice is considered a legal document once the parties involved agree to the content of the invoice. This is also why it is illegal to change the contents of an invoice unless to make corrections, as both parties are responsible for the contents of the invoice.
Misstating the value of your invoice (invoice fraud) is a severe crime in the eyes of the law. They’re often treated as a case of ‘Wire Fraud,’ which violates Title 18, United States Code, Section 1343, and could also be seen as ‘Money Laundering’ and ‘Tax and Custom Evation.’
Also, at least four U.S. agencies, from the U.S. Customs and Border Protection to the Department of Commerce - Bureau of Industry and Security, the Justice Department, and the Census Bureau, are all interested in this type of case—not to mention the authorities in China.Back to the Question—is it Risky?
Yes, it is. In fact, the damages your business could suffer if you got caught may far outweigh the gains you plan on making. Countries like India have a sentence of up to seven years in jail for these crimes, while the U.S. fines can be up to seven figures.Is it Common Practice?
No, it’s not common practice. We understand how challenging it can be for entrepreneurs wanting to grow their businesses with limited funds, but sometimes, the legally acceptable way isn’t the cheapest. Ensure you weigh the pros and cons carefully before making any decision.