A specialised team, the “Tax Cobra” was officially established in June 2014 under the joint effort of the Czech General Tax Directorate, General Customs Directorate and the Police Unit for Detection of Fraud and Financial Criminality to fight against VAT fraud in the Czech Republic.
One of the actions this year showed how governments can fight VAT and excise fraud. Six hundred members of the Tax Cobra struck in 40 places all over the Czech Republic, being supported by the Czech Army’s logistics forces. This hit was based on Tax Cobra’s wide investigation run since March 2014, aiming to destroy the organised group of people who were active in fictitious supplies of tobacco and alcoholic products. These products were declared as supplied to Slovakia, Poland and Hungary, however, they never left the Czech Republic and were sold in the country, without declaring and paying the related VAT. The principle was that the group had established several Czech and foreign legal entities which were connected to the so-called “white horses”, who declared exempt supplies which never took place. Fifteen people were captured, out of which six were accused of tax evasion of almost 253 million Czech Crowns based on their fraudulent activities performed since August 2011. They can be sentenced to up to ten years of imprisonment.
The latest action of the Tax Cobra took place last week. It had a similar scenario – an organised group fictitiously delivered electronical products (such as tablets, phones and other telecommunication devices) to other EU Member States, while they sold them locally, without proper payment of VAT. The VAT underpayment was calculated as amounting to 200 million Czech Crowns in this case. Eight people and five legal entities were accused of tax evasion.
Both of the above cases proved that the good cooperation between Police and Financial Authorities can support anti-tax evasion measures in the country.
In case you are interested in more detailed information from this area, please do not hesitate to contact Petra Safkova (petra.safkova@cz. pwc.com).