Officials Will Warn You Against VAT Fraud

Tax authorities want to help Polish entrepreneurs protect themselves against VAT fraud. As it turns out, it is not very difficult to unwillingly become a participant in the so-called VAT carousel, an elaborate scheme designed to illegally obtain government money in the form of value-added tax refunds. The officials will send out letters to those businesses who are at risk of becoming victims.

A VAT carousel, known also as a missing trader fraud, happens when a business reclaims a tax refund although they do not have grounds for it. To obtain it, as well as to cover their tracks, fraudsters carry out numerous, often fake, transactions, move goods from trader to trader and from country to country (at least on paper), and issue counterfeit invoices. Sometimes an inattentive business owner may unintentionally buy goods from a VAT fraud and thus become a participant in the fraud and get in trouble with state authorities.

Notice from National Fiscal Authority About VAT Fraud:

National Fiscal Authority announced they will send letters warning against suspicious traders and including advice on how to avoid dishonest counterparties. Pursuant to legal provisions, entrepreneurs should verify potential clients and suppliers before doing business with them. Officials recommend using a split payment mechanism when participating in VAT fraud transactions.

Tax authorities will send warnings with regard to suspicious transaction chains. The idea is based on the solutions that are in place in the Netherlands and the UK, as officials say. Identifying questionable traders is possible through analyzing the data obtained from banks and other institutions as well as companies in Poland who are now under obligation to report various financial information to their respective fiscal offices. For example, the National Fiscal Authority has information on over 7 billion invoices issued in Poland.

VAT frauds are prevalent across the EU. Member States lose as much as 50 billion EUR a year due to tax fraudsters, who are often international organized crime groups.