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Officials of the Estonian Tax and Customs Board's investigation department at the end of July carried out 17 simultaneous searches and detained seven people suspected of a tax offense amounting to almost eight million euros.
Group suspected of EUR 8 mln VAT fraud
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The detained persons are suspected of intentionally evading paying taxes in the sum of eight million euros in the period from April 2012 to July 2013. They allegedly decreased their VAT liability from the sale of fuels with fictitious purchase agreements. According to documents, they used companies which had permits for purchasing and selling fuel to buy fuel from an excise warehouse and transport it. It was also established that a series of purchase and sale transactions of precious and other metals was organized later to decrease the companies' VAT liability.
According to suspicions a group of at least 12 people organized the tax offense and many companies registered in Estonia or abroad were used for it.
Rain Kuus, head of the investigation department at the Tax and Customs Board, in his remarks released through spokespeople described the fuel sector as attractive to fraudsters because of its big turnovers, which makes it possible to earn huge illegal profit in a short amount of time. "A large international criminal network is connected to VAT evasions which are committed on a high organizational level in any field, be it sugar, fuel or something else," Kuus said.
By the request of North district prosecutor Martin Tuulik the Harju County Court permitted two of the people to be taken into custody, one of whom is suspected of leading the criminal group, because it was feared that they might continue committing crimes or go into hiding. The accused could be facing a 15-year jail term under the Penal Code if found guilty.
In 2012, VAT losses due to fraud amounted to 220-225 million euros according to estimates of the Tax and Customs Board. The estimated size of VAT loss in the fuel sector is approximately 4.6 million euros a month. The tax authority is at present auditing 34 companies active in the fuel sector.