Nearly 800 million leva per year is not received by the treasury due to fraudulent VAT schemes. The introduction of new legal rules and the control activities of the National Revenue Agency have reduced these losses several times compared to 2010, for example, when they were estimated at 2.6 billion leva.
Tax experts are categorical that the introduced information system for risk analysis and assessment plays a major role in revealing fraudulent schemes.
The experts of the National Revenue Agency divide VAT fraud into two large groups - evasion of obligations or tax evasion through fictitious transactions. In the first, the goal is to save on payment to the treasury, with the perpetrators being companies that carry out real activities. They conceal taxable income or overestimate expenses in order to claim a larger tax credit.
Revenue is reported through sales without issuing an invoice, transactions at lower prices than real or market prices, but the quantities are underestimated. Expenses are overstated using fictitious invoices, expenses that are not related to the activity, or overstated deliveries.
However, new schemes are also emerging. One of them, which is defined as a fraud from the first group, is applied after the boom in the property market. In it, an investor builds and sells housing, and the transactions are declared at a tax assessment that is many times lower than the market price, but this is permitted by law. When the company reaches a turnover of 160 thousand leva - which was the threshold for VAT registration for last year, it is closed, and the assets are transferred to a new one. She starts building on another plot of land and the scheme is repeated. Thus, the seller may not charge VAT. This fraud is applied not only to the real estate business, but also to other industries.
It also has several varieties, each of which circumvents two laws - on VAT and on cash payments. The scheme also serves the interests of those who play on the real estate market in order to legalize money without proven origin. Brokers indicate that the number of buyers who offer up to 50% higher prices is increasing if the seller accepts cash payment of the entire amount or part of it.
Construction developers, on the other hand, give discounts if the buyer agrees to pay in cash. Examples are also given - a price of 105 thousand euros in transactions without a mortgage and 226 thousand with a loan - i.e. 120 thousand The average hidden money is EUR 100,000, and in some cases the amount can reach 200 thousand.
During tax inspections, the so-called hidden investor is also encountered. These are people with financial resources, part of which is of unproven origin. They take on part of the financing of buildings and receive apartments, shops, offices from the builder at symbolic prices. The investor charges VAT on part of the money, not on the whole, and the hidden investor sells the apartments received and legalizes his money.
Each of these schemes is difficult to prove, most often it leads to fines for violating the ceiling for cash payments of BGN 10,000. The penalty for individuals is 25% of the payment amount, and for companies - 50%. However, the money saved from VAT is enough to pay the fine and make a profit.
According to tax experts, the most cases of VAT fraud occur in construction, trade in fast-moving consumer goods, production and trade in goods and services with high added value and complex calculation of the final output, as well as in intellectual property products. That is why most of their inspections are aimed precisely at these industries.
One of the first VAT fraud schemes is still encountered, in which the seller does not pay the VAT due on the sale or part of it, and the buyer uses the right to a tax credit refund and asks the state for money. It works by involving the largest possible number of companies through which each delivery passes, most of which are hollow.
For example, the so-called missing trader scheme continues. For it, a chain of companies is created that carry out fictitious transactions with each other. One of them accumulates debts, and all the others have managed to exercise the right to use a tax credit and recover VAT. Their control and detection are made more difficult by the fact that there are also those in the chain that are registered in other EU countries, usually where the relevant goods have a zero VAT rate. The debtor company does not repay its debts and resells itself - most often to the unemployed or socially disadvantaged.
There is also the so-called carousel fraud, which requires at least three suppliers, usually from different countries. In this case, multiple cross-border purchases and sales of the same goods are made, which are taxed at a zero rate. At the end of the chain, the goods are taxed with the lowest VAT for the group of countries, but are not paid into the treasury.
Export only by documents is a fraudulent scheme that is also implemented through companies registered in several countries, usually neighboring ones. The goods cross the border only by documents. When exporting, there are zero tax rates, and the trader recovers the tax credit on the costs and purchased goods. They are then sold on the domestic market without invoices.
A variant of this scheme is to carry out fictitious transactions within the EU as intra-community supplies, which are taxed at a zero rate. This is done only by documents, and the goods do not leave the border and are sold on the domestic market again without invoices and without paying taxes. However, the selling company recovers a tax credit on the costs.
A new variation of this scheme is to export goods to countries outside the EU - most often to Dubai or other Arab countries. They are then imported into an EU country and continue along the familiar chain.