Economic crime report 2004 - Ekobrottsmyndigheten

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VAT Fraud There is always a risk that output VAT will not be reported as required or that improper deductions will be claimed for ingoing VAT. VAT fraud can be committed in four basic ways. • A transaction is not declared and no VAT payment is made. As a result, no income tax is paid for any profit associated with the transaction. Nor is any selective purchase tax collected. • VAT is declared but not paid, a frequent occurrence when bankruptcies are being planned. • Based on false grounds, excess input VAT is declared so as to extort tax revenue from the state. • Goods are smuggled into Sweden from non-EU countries in order to sell them without having to pay income tax on the proceeds. As a result, no VAT is paid either. Both criminological research and government agencies in their daily work are highly familiar with the fraudulent methods employed in connection with VAT. Nevertheless, there is no doubt that attempts by the agencies to monitor such fraud have given rise to new methods. No reliable estimate is available as to the scope of VAT fraud. Consumers often fail to consider the issue when they purchase a good or service that is “exempt from VAT” at an unreasonably low price. Furthermore, competition becomes distorted when some businesses can offer lower prices than their rivals by virtue of not paying VAT. That has a ripple effect in that companies may turn to crime in order to survive. A special type of evasion, involving “missing traders,” has raised a great deal of concern within the EU. Also involving VAT carousel fraud, such activities have risen to a totally unacceptable level in countries like Britain and Germany. As a result, the European Commission undertook a special project to combat this type of VAT evasion. According to EU’s basic treaties, the Member States share the responsibility of monitoring harmonized indirect taxes. Analyses conducted in some EU countries suggest that uncollected revenues may exceed 15% of the taxable base. The final report of the Commission’s project concluded that VAT carousel fraud would continue to pose a risk for the foreseeable future. Despite indications that Sweden is no longer always the country that suffers the loss of tax revenue, it remains one station through which the carousels 12
pass. Thus, other Member States ask for Swedish assistance during various investigations of distribution and payment channels, etc. Trends Over the Next Three Years VAT will continue to represent a clear risk area, particularly in relation to crossborder trade. The enlargement of the European Union on 1 May 2004 to include ten additional countries is expected to affect VAT fraud associated with EUrelated trade. However, the new Member States are working on strategies to deal with these problems. Proposal • Indirect taxes in connection with crossborder trade deserve special attention. • International cooperation among various agencies is needed to more effectively monitor this area. Spurious Advisers and Tax Havens Dealings through tax havens have many different purposes and contexts. SKV has charted and described a number of such methods as part of various monitoring projects. Tax havens have been around for a long time. Prior to the deregulations of the 1990s, they were very expensive and complicated to use. Since that time, they have become much cheaper and simpler to use, while many sources of advice and offers are now available on the subject. The projects discussed above indicate that the utilization of tax havens is on the rise, particularly among small, profitable businesses. In recent years, most transactions have been conducted through facade companies in countries like Britain and the Netherlands. Estimates for Sweden put annual uncollected tax revenues related to international transactions at SEK 20-35 billion, of which SEK 2-5 billion stems from company formation through tax havens and SEK 8 billion primarily from investments by private individuals in low-tax countries that provide insufficient supervision. International tax evasion differs from other types in that the taxable basis is often lost forever. No revenue is ploughed back into the Swedish economy to create additional income. 13
Page 1 and 2: ECONOMIC CRIME REPORT Report no. 20
Page 3 and 4: Economic Crime Report
Page 5 and 6: Government Swedish Ministry of Just
Page 7: Economic Crime and Efforts to Comba
Page 10 and 11: Economic Crime - Current Status and
Page 12 and 13: Economic Consequences of Economic C
Page 14 and 15: Interagency Cooperation Measures Th
Page 16 and 17: Undeclared Work • Employers who h
Page 18 and 19: A CLOSER LOOK AT UNDECLARED WORK, V
Page 22 and 23: Trends Over the Next Three Years Fo
Page 24 and 25: Concluding Remarks The purpose of t
Page 27 and 28: Contents 1. Introduction 6 2. Curre
Page 29 and 30: 10.5 NATIONAL CRIME PREVENTION PROJ
Page 31 and 32: Table 31 Number of decisions by oth
Page 33 and 34: 2. Current Status of Economic Crime
Page 35 and 36: detected offences are documented, a
Page 37 and 38: sentative of both commercial goods
Page 39 and 40: mentary evidence for verifying actu
Page 41 and 42: SKV put together documentation to l
Page 43 and 44: that a certain volume of uncollecte
Page 45 and 46: Table 3 Estimated tax error linked
Page 47 and 48: The minimum tax rates on alcohol ar
Page 49 and 50: • Businesses, such as: - Tax plan
Page 51 and 52: According to the court of appeal, t
Page 53 and 54: loan prohibition, the Accounting Ac
Page 55 and 56: 4. It has a definite focus, though
Page 57: “A number of groups are engaged i
Page 60 and 61: Council and its task force have con
Page 62 and 63: Special joint consultation groups f
Page 64 and 65: 4. Intelligence and Monitoring Oper
Page 66 and 67: The total money involved in transac
Page 68 and 69: Intelligence Operations of Tax Crim
Page 70 and 71:
Graph 13 Number of audits, 2000-200
Page 72 and 73:
2002 to 2003. The sums involved in
Page 74 and 75:
Money Laundering, etc. A newly esta
Page 76 and 77:
Since the project started on 1 Apri
Page 78 and 79:
Manipulated cash registers are the
Page 80 and 81:
professional criminals to one degre
Page 82 and 83:
official figures. In the autumn of
Page 84 and 85:
ookkeeping offences continued to ac
Page 86 and 87:
Graph 25b Total number of reports o
Page 88 and 89:
Graph 26 Cases received, 1998-2003
Page 90 and 91:
Table 30 Number of decisions by EBM
Page 92 and 93:
Graph 34 Average throughput time fo
Page 94 and 95:
6.5 TAX CRIME UNITS Expansion of ta
Page 96 and 97:
Graph 38 Trading prohibitions, 1998
Page 98 and 99:
9. Attachment, Collection, etc. The
Page 100 and 101:
Graph 43 Unpaid taxes and fees (SEK
Page 102 and 103:
Since a coordinated effort to recov
Page 104 and 105:
According to the proposals, the age
Page 106 and 107:
and employers concerning registrati
Page 108 and 109:
suggest that attitudes are continui
Page 110 and 111:
84 • a regional informational pro
Page 112 and 113:
12. International Contact and Coope
Page 114 and 115:
13. Skills and Methods Development
Page 116 and 117:
Since the autumn of 2002, EBM has c
Page 118 and 119:
nesses under their control, grant l
Page 120 and 121:
social insurance offices could prev
Page 122 and 123:
15 Problem Areas and Future Threats
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• higher unemployment • distort
Page 126 and 127:
15.3 UNDECLARED WORK IN CASH SECTOR
Page 128 and 129:
EBM’s pilot project on measures f
Page 130 and 131:
15.5 AGENTS WHO AID ECONOMIC CRIME
Page 132 and 133:
ied out indicate that most transact
Page 134 and 135:
Appendix 1 CHANGES PROPOSED BY SAME
Page 136 and 137:
SKV • SKV should have limited aut
Page 138 and 139:
Transport Workers’ Union VAT Info
Page 140:
Reported economic crimes have incre
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Economic crime report 2004 - Ekobrottsmyndigheten

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