The war on tax fraud was one from the flagrant electoral demands of the present power. Additional promises one billion Gold for the state budget, which will be taken from the bandits and passed on to socially useful purposes. However, any tool to combat pathology may prove to be a double-edged sword. The statistics that the government boasts are a success on the numerical side, but they hide second bottom. They may cause financial liquidity distortions for honest entrepreneurs.
Map of mob activity in VAT
The most well-known way to defraud baseless VAT returns is the so-called tax carousel. Without addressing this issue from the details of tax law, it can be said that this is a multiple trade in the same goods by a group of entrepreneurs with at least one a counterparty from another EU country. The resulting ‘VAT mafias’ have repeatedly extorted from the state's treasury the amounts calculated in one million Gold.
Not all members of a criminal carousel are crooks.
This phenomenon is widely known in the European Union. Each Member State shall take different measures to prevent this. The Court of Justice of the European Union (TEU) has issued a huge number of judgments on liability for participation (aware or not) in criminal carousels.
Honest entrepreneur pawned in a crime group game
It might seem that the detection of a ‘tax carousel’ means the disclosure of a circle of traders composed only of fraudsters. However, reality can be much more complicated. The carousel created only and exclusively from “swindlers” companies is relatively easy to detect.
These are the most recent companies, employing as few people as possible, but creating certain appearances of normal business activity. If a group of such "entrepreneurs" trades huge amounts and then seeks a refund of VAT, it is easy to draw the attention of the tax office.
For this reason, the ingenuity of criminals is often directed towards seeking a specific shield. It's about swindling honest entrepreneurs into the tax carousel. The most welcome companies are well known in the industry, operating on the market for a long time and having no fiscal problems.
The detection of the tax carousel has repeatedly caused shock and disastrous financial consequences for entrepreneurs who had no idea they were involved in criminal activity.
Suggestions of the Court of Justice of the European Union
The case law of the Court of Justice of the European Union pays particular attention to two concepts. Good faith and due diligence. This refers to any VAT fraud in which the entrepreneur may have been unconsciously involved.
The taxpayer must not suffer any negative financial consequences due to illegal activities of the counterparty if he did not know about them and, with due care, he could not know.
The discrepancy between the case-law of the TEU and the views of the Polish government concerns the scale of the requirements to be met in order not to be punished for another's crime.
Request that the contractor in writing declare that he is not a criminal
The issue of taking appropriate steps to avoid liability for fraud of other persons has become the subject of a collection of advice from the Ministry of Development and Finance led by the Minister of Morawiecki.
In response to Question No 14059 dated 19 July 2017 The ministry advises, among other things, to request a written statement from the contractor that this "does not participate in tax fraud". Furthermore, the declaration should contain a declaration according to which ‘the goods to be sold do not come from a crime’. In addition, the Ministry advises that consideration be "preserved" when the counterparty proposes to trade ‘high-risk’ goods. For example, scrap metal, electronics, coffee and tea.
In the case of coffee or tea, we should be careful. On the other hand, when "someone proposes a good interest with EU counterparties", the ministry advises that "be careful". At the same time, it was pointed out that following the advice given in the above-mentioned response to the interview can only "minimise risks". No guarantee can therefore be obtained.
In the same document, the Ministry declares that work is underway on the development of a "complete and precise" list of conditions that the entrepreneur should meet in order to protect himself from the negative financial consequences in the event of cooperation with the contractor committing the crime.
However, there is no guarantee that this "new" list will not be as vague and vague as the present one (or even the rise). Given the government's position on the eager fight against tax fraud, it can be assumed that even hiring a private investigator to X-ray all contractors would not give the entrepreneur certainty that he would not be charged with being involved in VAT recovery.
Who's funding extra one billion from VAT sealing
The government considers that dry numbers clearly demonstrate success in combating tax fraud. In practice, the State's budget may be gaining from the retention of VAT returns to honest traders due to the suspicion of participation in fiscal criminal offence.
Source: Forbes