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THE WAYS OF ILLEGAL OBTAINING VAT IN POLAND

J. Dlugosh () and M. Vashchenko ()
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J. Dlugosh: adjunct of the Department of Finance and Banking of the Economic Faculty of the University of Warmia and Mazury in Olsztyn
M. Vashchenko: Chairman of the Board of WBM Polska Ltd

Economics of Development, 2017, vol. 81, issue 1, 32-38

Abstract: The mechanisms and ways to defraud the value added tax (VAT) in Poland have been discussed. Nowadays the value added tax defraudation mechanisms have become a very widespread phenomenon in Poland which threaten the functioning of both the Polish national economy and the country as a whole. Based on the survey some particular mechanisms of VAT extortion, have been studied, namely the "VAT carousel", fictitious exports, undercutting sales and fictitious costs. The survey was conducted amongst persons who are aware of the value added tax problem and who potentially could encounter such illegal practices in their professional activity. The respondents can be divided into three groups: people who work in accounting, private entrepreneurs, and people employed in other sectors. The way how companies operate in the market to effectively extort VAT has been described. The survey made it possible to identify the most popular methods of VAT extortion. They are fictitious costs, undercutting sales and the "VAT carousel". The fictitious costs and undercutting sales used for the illegal purposes are the most popular practices. They do not demand any sophisticated preparations and defraudation with the use of them does not cause any serious problems. In turn, the tax carousel demands considerable praparations and costs. Nevertheless, this mechanism can make it possible to get illegally considerable sums of VAT. The respondents also pointed out the factors encouraging VAT extortion and methods for clearing this kind of crime. They also suggested changes necessary to minimize VAT defraudation.

Keywords: value added tax; extortion; VAT carousel; fictitious export; undercutting sales; fictitious costs. (search for similar items in EconPapers)
Date: 2017
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