Poland’s Central Bureau of Investigation announced the arrest of five individuals suspected of a large-scale VAT fraud which may have exposed the budget to a loss of revenue in the region of EUR 80 million on Friday.
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The organised white-collar crime ring is said to have operated between 2015 and 2016 in Poland,
Slovakia and the Czech Republic, its primary aim being to obtain VAT refunds by fraudulent means,
using a network of shell companies trading in low-priced goods such as coffee, batteries and
razorblades, or engaging in various types of fictitious business.
Investigators confirmed that they identified suspicious money transfers between companies established by the suspects as well as secured fraudulent documentation such as fake VAT invoices. The prosecution service announced that the investigation is still ongoing, which means that additional individuals or companies involved with the illegal scheme may still be identified at a later stage.
All five individuals forming part of the group have been arrested for 3 months and may face severe fines as well as up to 10 years in prison if found guilty.
The current government has taken a tough stance on tax evasion and VAT-related crime, leading to a notable hike in state budget revenue, with officials claiming an increase of 23.9 percent in 2017 alone.
In years 2007-2015, the Polish state budget is believed to have lost more than EUR 60 billion in tax revenues due to fraudsters exploiting tax loopholes on an unprecedented scale, leading to what the current government has referred to as the biggest financial scandal in Poland’s history.
Analyses of the state finances performed by the Finance Ministry show that the VAT loophole increased sevenfold between 2007 and 2015, growing by a staggering EUR 10 billion. A parliamentary committee tasked with looking into the scandal has begun witness hearings in late September this year.