Russians warned about fraudulent schemes for VAT refunds

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Lawyer Gusyatnikova: a common scheme for fraud with VAT is its return when exporting

Russians warned about fraudulent schemes for VAT refunds

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Polina Gusyatnikova, senior managing partner at PG Partners law firm, warned Russians in an interview with Izvestia that fraudsters had come up with a new fraud scheme for VAT refunds.

According to her, unscrupulous businessmen use several schemes for illegal enrichment. In particular, we are talking about the return of VAT on exports.

Thus, the most common scheme is the return of VAT on export, when all outgoing VAT is refundable, since there is no input. “In such schemes, fraudsters, for example, declare one product, and another goes abroad, or the transaction takes place between front companies, and VAT is refunded from a non-existent product,” the lawyer said.

Also, attackers use the return of preferential VAT. For example, if a company trades in grain, then VAT on its sale is 10 percent, and transport costs are subject to VAT at a rate of 20 percent.

“That is, the outgoing VAT will be greater than the incoming VAT, and 10 percent of the difference is refundable. This scheme is similar to the previous one in that the goods may not have been produced, the deal is fictitious,” Gusyatnikova explained.

She added that in fictitious transactions, contracts are signed between front organizations, but now such fraud schemes are less and less possible, since all accounts are checked in a special program when submitting a VAT return.

Earlier it was reported that in Russia the number of fraudulent letters that promise easy money has increased. In the second quarter of 2021, users in Russia received about two million fraudulent emails promising easy money. This is almost three times more than from January to March this year or the fourth quarter of 2020.

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