COORDINATED STRATEGY TO IMPROVE FIGHT against VAT FRAUD in LITHUANIA September 2013, Riga

By fighting VAT fraud we aim: detect illegal activities; figure out schemes of activities of dishonest traders; break their used schemes; bring them to relevant responsibility as quickly as possible

Pre-registration control It is better to prevent bogus trader from entering VAT system than “following” him afterwards; By performing pre-registration control we: -have 3 days to assess if trader’s intentions to carry out its economic activity are reliable; -refuse registration for VAT if taxpayer does not prove he will be performing actual business activity

Post-registration control −Close monitoring of new VAT payers for 1 year; −Objectives are: ascertain they perform real business and are not used for illicit activities; deregister from VAT if they do not carry out real business activity; Control means depend on risk level:

Tools to identify fraudsters (1) 1. Data base about tax law infringements “black list” of companies fulfilling certain criteria 2. LT tax administrator can apply a wide range of orders to particular tax payer for a certain period of time

Tools to identify fraudsters (2) 3. Information from FIU about suspicious transactions reports (money transfers); 4. EUROFISC operational info (data and feedbacks) are stored in data base which is used in risk analysis; 5. International information exchange data base containing data about foreign companies and persons submitted by other tax administrations.

Tools to identify fraudsters (3) Early warning mechanism 6. Early warning messages sent by member states via EUROFISC about particular VAT fraudsters operating in other member states, about new economic sectors where the fraud was detected/observed, new types of goods used in fraud are taken by LT tax administration into consideration and are used in risk analysis manually. Information Risk analysis STATE TAXE INSPECTORATE

Tools to identify fraudsters (4) 7. LT-LV-EE yearly exchange data about their companies whose officials are citizens from other Baltic states: - foreign persons are often “employed” as managers of companies that are used in fraudulent schemes; -therefore exchange of fraudsters’ lists among EU member states could be a source of useful information to tackle companies they use in fraudulent schemes; -this exchange of lists could be done in EUROFISC and could become part of early warning mechanism across EU; Information

Anti-fraud unit A separate unit responsible for detection and investigation of VAT fraud cases is at the central level of LT tax administration: when, on a request, an analysis is made, information is better Contact point for EUROFISC network (analysis of received data and submission of data)

Cooperation (1) Risk Analysis Centre established in 2011: What it does: Exchanges information swiftly and immediately to tackle fraudsters; analysis and support for “on going” fraud cases: what is the best approach; if risky persons/schemes are established, transmits this info to relevant persons in charge to take actions; FINANCIAL CRIME INVESTIGATION SERVICE STATE TAXE INSPECTORATE

Cooperation (2) Although tax administration and customs authorities are different institutions in Lithuania, Close cooperation with customs authorities regarding investigation related to customs procedures allowing not to pay import taxes and therefore are gateways to carrousel frauds in EU; Also close cooperation with Customs criminal service responsible for conducting criminal investigations helps to share knowledge, information, suspicions at the early stage in order to take proper decisions afterwards, make joint control actions; STATE TAXE INSPECTORATE CUSTOMS OF THE REPUBLIC OF LITHUANIA

Publicity (1)  LT tax administration publishes on its Internet site names of honest taxpayers that pay the most taxes;  Non-tax-compliant tax payers are published as well: –info about final LT court decisions regarding used fraud schemes and assessed taxes to LT companies; –info about identified fraud schemes without naming persons or companies if court decisions are still pending;

Publicity (2)  On LT tax administrations web site you’ll find: List of entities/persons that do not obey to tax administrator’s assignments; List of tax payers that are assigned to pay non cash to clients; List of companies that did not submit declarations about paid salaries; 100 largest debtors who have not paid VAT according to last VAT returns.

TOGETHER AGAINST VAT FRAUD THANK YOU FOR YOUR ATTENTION