Selection of enterprises as a way of concealing circuit operations

In order to avoid taxation some taxpayers practice pretending to separate other enterprises from them.

The main enterprise makes out unrealistic operations on the acquisition of products which neither on the nomenclature, nor on volumes do not correspond to the real production needs. Or it carries out unaccounted sales of consumer products, particularly pre-imported. As a result, in the first case, a tax credit scheme is formed, in the second – tax liabilities are not accrued. And in general this is the VAT evasion.

To conceal such operations, first of all to prevent the supervisory authority from finding out the actual absence of allegedly purchased or unaccounted products, the taxpayer makes a decision to allocate one or two other enterprises, which without the VAT (permitted by law) allegedly receive transferred to the distribution balance of these products.

Usually, selected enterprises do not register as the VAT payer, do not submit financial and tax reporting, do not even open bank accounts, are absent at the tax address, etc. Taken together, this indicates the unreal nature of their activities.

However, the supervisory authorities in principle respond to the tax evasion facts, regardless of the ways in which they are concealed by the taxpayers.

For example, the auditors of Sumy region, having found out a similar scheme during a documentary audit of one producer of alcoholic beverages, additionally accrued the VAT liabilities totaling almost 22 million UAH.

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