On June 15th, Scorpio VC, a Hong Kong investment organization, released its third short-selling report for GSX, focusing on the tax data and VAT fraud. It is the tenth short-selling accusation received by GSX this year.

Scorpio VC claimed that according to GSX's VAT data in its annual report published in 2017 to 2019, the VAT paid in these three years was 6.42 million yuan, 26.22 million yuan, and 134.00 million yuan respectively, with the total amount exceeded 160 million yuan. The tax rate was as high as 6%. However, based on the standard VAT rate of 3% for taxpayers providing educational services, the total VAT payable for GSX in these three years should be 80 million yuan. The tax that should be paid is much less than the paid amount, which means the income is manipulated.

Besides, Scorpio suggested that as an educational institution, GSX can only rely on fraudulent tax data and VAT fraud to prove the authenticity of its income. Moreover, Scorpio mentioned that the internal tax department's supervision on the common stocks in China is still in a blank area. GSX falsely reports VAT data overseas without being regulated is a regulatory loophole in the current stock market. 

Before this, Scorpio had released two short-selling reports on GSX, focusing on issues related to its falsification of financial and operational data, the overvalued stock prices, poor course quality, low teachers qualifications, and VAT fraud. As of press time today, GSX has not responded to Scorpio's third report.

Notably, as of now, GSX has been accused of financial fraud ten times this year. However, its stock price has risen steadily, up 137.88% YTD. Yesterday, its stock price had increased by nearly 30% to $52 per stock, and then rose 1.5% in after-hours trading.