Transcript VAT evasion- Belgrade part 2

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FRAUD METHODS
1. Fictitious invoices/ double invoices
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2. Non-declared IC acquisitions
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IC acquisitions not declared in the accounting books
and declarations
Hijack Vat numbers
Traders use their Vat number to purchase goods
which are for private use
Non declared purchases from persons not subject to
VAT (e.g. farmers, doctors, lawyers) and VAT not
paid
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3. Fictitious intra-Community supplies/
fictitious exports
MEMBER STATE 2
Fictitious customer
abroad
Profit: € 0 Vat to pay
Trade on the black market
National trader
MEMBER STATE 1
Domestic customer
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4. The "simple" Missing Trader fraud
MEMBER STATE 2
Customer
Profit:
(€ 900+ Vat)- € 1000
€ 900 + Vat
Company B
“Missing trader”
€ 1000
0 % Vat
MEMBER STATE 1
Supplier
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5. Missing trader intra-Community Fraud
(MTIC fraud)- CAROUSEL FRAUD
(A)
Greek
Computer Parts
Distributor
CAROUSEL FRAUD
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(A)
Greek
Computer Parts
Distributor
(B)
Italian
Company 1
“missing trader”
Zero-Rated Supply
€100,000
CAROUSEL FRAUD
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(‘C’)
Italian
Company 2
“Broker”
Taxed Supply
€95,000 +
€10,000 VAT
Reclaims Input Tax
(A)
Greek
Computer Parts
Distributor
(B)
Italian
Company 1
“missing trader”
Tax Loss
Zero-Rated Supply
€100,000
CAROUSEL FRAUD
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(‘C’)
Italian
Company 2
“Broker”
Taxed Supply
€95,000 +
€10,000 VAT
Zero Rated Supply
€97,000
Reclaims Input Tax
(A)
Greek
Computer Parts
Distributor
(B)
Italian
Company 1
“missing trader”
Tax Loss
Zero-Rated Supply
€100,000
CAROUSEL FRAUD
Buffer22
Buffer
(C)
Italian
Company 2
“Broker”
Buffer1
Company 1
“missing trader”
(A)
Greek
Supplier
CAROUSEL FRAUD
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The missing trader:
no real commercial activity, no VAT returns/zero VAT
returns/no payment, Straw men, disappears quickly
The buffer:
normal trader between the missing trader and the
broker, distorts the investigations
MTIC fraud
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The broker:
Purchases from the buffers and supplies in the
domestic market or in another member state. Claims
VAT refunds/VAT deduction and can sell in low prices
because of the fraud
The conduit company:
Declares IC supplies, claims VAT refunds, usually “in &
out” company
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Weaknesses
Inherent to the VAT system
intra-community acquisitions of goods without
payment of VAT
deduction of VAT with no condition tied to the
payment by the supplier
In the control systems
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Weaknesses
Inherent to the VAT system
In the control systems
Insufficient control at registration
Insufficient use of administrative cooperation
Difficult to detect carousel mechanism by applying normal
risk analysis
The organisation of the tax administrations is often not
adapted
Taxation effort too focussed on the missing trader (without
any assets).