bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 23.01.2017 | Name days: Strauta, Grieta
LatviaLatvia

At least 25 million have been defrauded in tax fraud schemes in past five years

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUSchemes aimed at defrauding VAT using gold trade are a classic example of why the State Revenue Service and Finance Ministry cannot deal with tax fraudsters. Over the course of the past five years, fraudsters have been paid at least EUR 25 million. It is the money residents paid in VAT when buying bread, milk and beer in 2 litre plastic bottles.

To combat tax fraudsters, Estonia introduced the first reverse VAT payment procedure for gold products in 2012. Fraudsters then turned their gaze towards Latvia. Unfortunately, the Latvian government did nothing these past five years. Latvia plans to introduce its reverse VAT payment procedure for gold next year. Since 2009, tax administration processes have been under supervision by Unity’s ministers and prime ministers. According to Unity’s ministers, thy have not received any signal from SRS to act. SRS, on the other hand, claims requests for tax system changes have been requested multiple times since 2013.

Latvia’s gold and jewellery turnover ranges around EUR 20 million annually. These millions are processed by jewellers, buyers and wealthy people. Gold exporters earn the most money. These people have found in Latvia a source of endless wealth, it seems.

1 April 2012 marked the coming into force of Estonia’s new VAT payment procedure for transactions with gold. This new procedure helped Estonia effectively end the reign of VAT fraudsters. Nevertheless, fraudsters liked their niche – gold is a grateful material for their criminal activities. A small gold bar costs hundreds of thousands of euros. It can be easily transported.

The scheme itself is simple: company X declares having bought low-fineness gold from sellers that are hard to identify – private person or foreign citizen. The gold is then sold to company Y, adding the VAT amount to the transaction amount. Once the transaction is done, the company declares it to the revenue service, but does not pay. The company is then quickly dissolved. Company Y then declares having carried the gold from the country and asks a return of VAT. Company X paid no tax, but the revenue service pays the amount from the budget. In reality, however, the same person is behind company X and company Y. This person declares the same gold time and time again, defrauding millions from the budget in the process. Once Estonia put an end to it, fraudsters relocated to Latvia.

Assay Office of Latvia is the only organization in the country that dictates the quality of gold. Fraudsters go to this office to receive a state recognized document on the amount and quality of gold. This document serves as cover to make it harder for SRS to uncover fictive transactions. In reality, the office processes the same gold time and time again.

Transaction activity is also demonstrated in statistical data. In 2010, Latvia exported gold worth EUR 1.8 million. In 2012, this amount reached EUR 27 million. The largest volume was reached in 2015, when the country exported 1.4 tons of gold worth EUR 38 million. Turkey dominates as export destination. Other prominent gold export destinations include Germany, Poland, Denmark and Estonia.

The annual account of Gold Bonus Company states the company is engaged in wholesale trade of precious metals and finances. The company performed no business actions in 2011. The next year, however, the company’s turnover reached EUR 4 million. Estonian citizen Marti Pajomagi became the company’s owner in 2014. The company’s turnover for that year reached EUR 17 million. The company was dissolved before SRS could halt its function. Gold trader Unico Gold Latvija had a turnover of LVL 7 million in 2012. It is registered in a respectable building on Citadeles Street; owners come from Estonia. It was a major breakthrough for the company, as its turnover was only LVL 48 thousand in 2011. This company was closed by SRS two weeks ago.

«The State Revenue Service was informed that VAT reverse was being introduced in Estonia. In 2013, we found that those companies had entered Latvia’s market very rapidly – the number of their processed deals had increased very rapidly. In 2013, during a meeting with Assay Office of Latvia, we concluded that those transactions could reach EUR 30 million and EUR 6 million of that amount could be defrauded VAT,» – said SRS Tax Office deputy director Agnese Rudzite.

SRS began monitoring precious metal traders very carefully. Twenty nine companies were closed down in 2014 and sixteen more in 2015. Unfortunately, this did not help the situation all that much. The country lost several dozen million euros over the course of four years. Finance Ministry was informed of the situation multiple times. The ministry was even asked to introduce a reverse VAT payment procedure, adopt a licensing approach for the industry or at least adopt a security fee requirement for transactions with gold, but nothing was done.

Laimdota Straujuma’s government formed the Grey Economy Combating Council in 2014. Its main objective is to monitor institutions that combat tax avoiders, corruption and unregistered businesses.

Members of the council include the head of SRS and the Finance Minister. Janis Reirs was Finance Ministry until 2016. Before then, he was the head of Saeima’s Budget-Finance Committee. Reirs is skeptical about the efficiency of the reverse VAT payment procedure, as he believes fraudsters will simply move to another industry or other country.

Ref: 102.109.109.6782


Leave a reply

Week in Lithuania. CIA declassifies document on Lithuania’s post-WWII guerrillas

A report about guerrilla fighting against the Soviet occupation after World War II is among hundreds of thousands of declassified documents published online by the United States Central Intelligence Agency.

People no longer believe in their own country, because they associate it with people who make decisions

The biggest threat to Latvia is the fact that society, including state officials, is afraid. People are afraid of change, afraid of voicing their thoughts (thoughts that often do not comply with the politically correct stance), afraid of being misunderstood. Fear makes it harder to develop. It limits people’s internal freedom. Such is the opinion Inga Antane, president of Baltic Association – Transport and Logistics and sworn attorney of Triniti law firm, explained in her interview to Atbalsts.

Expert: «Lithuania’s renewed National Security Strategy is a «hodgepodge»

This week, the Lithuanian Parliament has overwhelmingly approved a renewed National Security Strategy, laying out 14 major hazards and risk factors to national security.

Industry: advertisements contribute the entire economy of the European Union

Every euro invested in advertisement has seven times the influence on a country’s GDP. Every one euro brings seven euros in return to the country’s GDP, as emphasized by Latvian Advertising Association, noting that advertisement sector contributes to employment in all of the European Union.

Six deputies applied with administrative penalties in Saeima’s autumn session

According to information provided to the parliament, six deputies were applied with administrative penalties during Saeima’s autumn session.

Slower economic growth for Estonia forecast – at 2.2% - for 2017

The economic growth of Estonia in 2017 will be slower than previously expected, Swedbank economists have announced lowering their previous economic forecast for the Baltic country by 0.2% to 2.2%.

Latvian and Lithuanian authorities dismantle two criminal groups

Latvian State Revenue Service’s Finance Police has successfully apprehended two organized crime groups that caused significant damage to the state budget in 2015 and 2016 by realizing different VAT fraud schemes.

Estonia to drop special pensions, push forward sweeping pension reforms

The Estonian government has decided to drop special pensions and to push forward with plans regarding other significant changes in the pension system, including tying the retirement age to the average life expectancy.

KNAB performs inspection about Jakrins’ approval in the board of Rīgas satiksme

Corruption Prevention and Combating Bureau intends to inspect if the approval of acting head of Riga City Council’s Transport Department Emils Jakrins in the management board of Rīgas satiksme had any signs of breach of good management principles.

Chinese GDP up 6.7% in 2016

World’s second largest economy has seen a 6.7% growth in 2016, Chinese official data show, which indicate that the gross-domestic-product increase has been slower than the 6.9% seen in 2015 and the slowest since 1990.

Dozens buried in Italy’s avalanche-stricken hotel

Italy has been shaken by a number of earthquakes this week, one of which has triggered an avalanche burying a mountain hotel, where at least two people have been found dead and dozens more a searched for through rubble and snow.

Weekends to experience frost and thaw; drivers urged to be careful

Weather in Latvia will not be stable in the next couple of days – cloudy weather with some precipitation will be mixed with periods of clear sky, according to State Environmental, Geology and Meteorology Centre.

Logistics Industry Council assesses results of 16+1 summit

Experts say container cargoes have the potential to bring major contribution to the logistics sector. With that, LDz Logistics intends to continue organizing the next container train from China, as well as cooperate with partners from Belarus and China in the context of the Great Stone industrial park, as BNN was informed by Transport Ministry’s representative Ilze Greiskalna.

Parliament supports amendments to avoid expensive land-measuring actions

It will no longer be necessary to prepare land border plan for entry of land units in the Land Book. It will help save budget funds, as it will not be necessary to perform land-measuring actions, as reported by Saeima press-service.

CP supervisors concerned about Latvijas Gāze’s contract terms

The Competition Council is concerned about Latvijas Gāze’s behaviour in the process of liberalization of the country’s gas market. Economy Ministry has submitted a draft of the Gas Trade and Use Rules to the Cabinet of Ministers Committee for review.

Germany seeks clarity from Trump’s government, to boost military spending

Berlin has emphasised plans to increase defence spending after facing criticism from upcoming U.S. President Donald Trump on NATO countries not meeting their spending commitments.

Saeima re-elects Elita Krumina as State Auditor

On Thursday, 19 January, the Saeima re-elected Elita Krumina in the post of State Auditor.

Saeima supports formation of aircraft passenger data registry to combat terrorism

On Thursday, 19 January, Latvia’s Saeima approved the Aircraft Passenger Data Processing Law in the final reading. This will form the passenger data registry.

Milk retail price in Estonia reaches 55 cents per litre after to price hikes

After a long period of low milk purchase prices in Estonia, milk retail prices in the Baltic country have increased twice, reaching the point where famers receive just enough to cover milk production costs.

Ventspils Freeport carries Lembergs around with luxurious car worth EUR 156,000

In spite of a 16.44% turnover decline, Ventspils Freeport bought a lux-class Audi A8L W12 for EUR 156,000 last year. It’s only known passenger so far has been the formally suspended chairman of Ventspils City Council Aivars Lembergs, as reported by Latvijas Avīze.

Estonia concludes bilateral defence framework deal with Finland

Estonia and Finland have signed a bilateral defence cooperation framework agreement aiming for closer and more regular cooperation in the field by the neighbouring countries.

Biden: Wealthiest 1% does not pay enough in taxes

The «top 1% is not carrying their weight», outgoing U.S. vice-president, Joe Biden evaluated at the World Economic Forum, insisting the world's wealthiest that they do not pay enough in taxes.

Latvia and Japan sign convention on attraction of foreign investments

In Tokyo, Latvian Finance Minister Dana Reizniece-Ozola and Japanese Foreign Ministry’s Parliamentary Vice-Minister Motome Takisawa signed a convention between the two countries on double taxation prevention for income tax.

FM: problems with real estate tax cannot be resolved with tax rate corridor

Real estate tax benefits for housing area could be applied for each person declared living in each respective house. Each benefit can be applied to the building and land, Finance Ministry’s representative Aleksis Jarockis reported on conclusions made by the work group responsible for amendments.

Turkey’s New Year’s terrorist admits choosing nightclub randomly

The main suspect of the attack in Istanbul, which left 39 people dead during New Year’s celebrations, had selected randomly the place of attack.

When do you pay fines for speeding?

View Results

Loading ... Loading ...

Polls Archive



Category feed: Feed: