Billions Lost Every Year
Director of Tax Investigations Bryndís Kristjánsdóttir. mbl.is:Hari
Billions of Icelandic krónur, which ought to be paid in taxes to the Icelandic State every year, are lost due to the misuse of tax identification numbers by Icelandic companies, Morgunblaðið reports. Sigurður Jensson, specialist at the Directorate of Tax Investigations, states that this has nothing to do with business operations, but is instead organized crime.
A recent risk assessment done by the analytical department of the office of the National Commissioner of the Icelandic Police assesses the risk of tax evasion due to organized crime as enormous, or at the highest stage.
One method employed involves using a business with a normal operation to take over another company, where individuals - oftentimes residing abroad, elderly, or even patients – are brought in as nominal directors of the company. These individuals then become authorized signers of bank accounts and credit card holders.
Fake bills are then issued by the new company to the business with a normal operation until the new company goes bankrupt, which can take a year and a half or two. At that point, another company takes over the bankrupt one. The fake bills are used to reduce value added tax payments and income tax on profits of the business with the normal operation, to get money out of the business without paying taxes, or to pay unreported wages.
The people who have agreed to be board members receive a certain payment, which may be ten percent of bills issued in the company’s name.
When cases involving such fraud go to court, the perpetrators themselves are most often the target, while the nominal board members escape punishment. One person has been on the board of 21 such companies.
Cases under investigation at the moment involve close to ISK 300 million (USD 2.4 million; EUR 2.1 million). There are examples of companies being involved in such fraud having emerged with the winning bid on public projects, since the behavior has lowered the cost of the project, due to unreported wages.
Director of Tax Investigations Bryndís Kristjánsdóttir states there are indications of the existence of foreign groups of criminals in the country, taking advantage of loopholes in the Icelandic tax system.
