Four arrests have been made in Cardiff and Newport in one of the largest VAT fraud operations of its kind.
The alleged fraud involves large quantities of mobile phones
Three men and a woman were arrested in south east Wales after 10 premises were searched in the region.
About 350 Customs and Excise law enforcement officers led the swoops across the UK and Spain in an investigation connected with a mobile phone scam with an estimated VAT loss of £120 million.
Raids were carried out at 70 properties and a total of 39 people were arrested - all have since been released on bail.
Known as missing trader fraud, criminals obtain a UK VAT registration order to acquire goods VAT free from other EU member states.
The goods are then sold on at VAT inclusive prices and the criminals disappear without paying.
This type of fraud cost the UK Exchequer between £1.7 and £2.75 billion in stolen VAT in 2001 - 2002.
A total of 40 businesses and 31 homes across the Wales and England were searched by customs investigators and police in the raids carried out on Wednesday.
Arrests and searches were made in Buckinghamshire, Cheshire, Coventry, Essex, Lancashire, Liverpool, London, Manchester, Middlesex, Northampton, Reading, Sheffield, Slough, Staffordshire, Stoke-on-Trent, Surrey, Wolverhampton.
Searches were also carried out in Barcelona, Malaga, Majorca and Tenerife.
A total of 33 men and six women were arrested and are believed to be part of a sophisticated network of companies that "carousel" large quantities of mobile phones.
It is believed that the fraud involved buying mobile phones from the continent VAT free and supplying them to businesses in the UK.
The carousel occurs when companies then sell the phones back to the Continent, without payment of VAT to the UK Government and without the phones ever being used by a
Cash and one tonne of cannabis were also seized during the raids.
The UK Government pledged to crackdown on this type of crime during this year's budget.
John Healy, the economic secretary to the Treasury and Customs Minister, said: "VAT missing trader fraud is not a victimless crime, it costs around £2.5 billion a year enabling criminals to fund lavish lifestyles - money that could pay for an extra 100,000 nurses.
"We have put measures in place to tackle Missing Trader Fraud.
"These are in the interests of all legitimate businesses because the fraud distorts competition and forces legitimate traders out," he said.
All those arrested in the raids have been released on bail.
A spokesman for HM Customs and Excise said: "This is the largest alleged VAT fraud of its kind.
"It has been a mammoth task and we have recovered reams and reams of paper and computer chips so it is going to take a while to investigate," he added.