Three-letter scam: how scammers cash in on VAT refunds |  Articles

Russian law enforcement agencies have achieved the extradition from Montenegro of a Russian who may be involved in the theft of more than 100 million rubles from the federal budget. According to investigators, as part of a criminal group, he issued a VAT refund using fictitious documents. Details – in the material “Izvestia”.

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A resident of the Rostov region, Nikolai Kaymakchi, accused of multimillion-dollar fraud, was handed over by the Montenegrin authorities to representatives of the Ministry of Internal Affairs and the Federal Penitentiary Service of Russia on January 14 to be sent to Moscow.

According to the official representative of the Ministry of Internal Affairs, Irina Volk, Kaimakchi, as part of an organized group, falsified documents on the results of the financial and economic activities of several companies in Rostov-on-Don, which gave these companies the right to VAT refunds from the federal budget. According to fictitious declarations, the alleged accomplices managed to seize the amount of 100 million rubles.

Nikolai Kaimakchi

Photo: Ministry of Internal Affairs of Russia

“The illegal activities of the group were stopped when the accomplices tried to get another refund of the value added tax of the controlled organization in the amount of more than 60 million rubles for the II quarter of 2014,” — reported Irina Volk.

It is known about Nikolai Kaimakchi that he lived in Taganrog, in 2008 he established the Minstroy construction company and became its general director. In 2015, the company was declared bankrupt, and Kaymakchi became a co-owner of another company, Unigift (liquidated by decision of the Federal Tax Service). Also in 2010, he registered as an individual entrepreneur, but he stopped his activities in this status long ago.

Earlier, Izvestia reported on the arrest of the son of the famous lawyer Pavel Astakhov Anton in the case of an illegal VAT refund scheme – the damage amounted to 1.2 billion rubles.

Telman Ismailov

Telman Ismailov

Photo: TASS/Vyacheslav Prokofiev

Program Guide

The extradition process from Montenegro Kaimakchi is interesting in the context of another high-profile investigation – in relation to the oligarch Telman Ismailov. However, the former owner of the Cherkizovsky market is in a better position – in October 2021 he received political asylum in the republic. The Russian Prosecutor General’s Office appealed to the authorities of Montenegro with a request to cancel this decision. Recall that Ismailov is accused of a number of serious crimes, including complicity in two murders, illegal arms trafficking and kidnapping.

– Montenegro has concluded an extradition agreement with Serbia, Italy, Macedonia, Croatia and Bosnia, – told Izvestia Sherzod Abdulkasimov, partner PraeLegal. – There is no such agreement between Montenegro and Russia, which is one of the main advantages for criminals who want to hide from the Russian authorities. One of the advantages of Montenegro for criminals seeking asylum is the Republic’s Citizenship by Investment (CIP) program, according to which citizenship is granted to persons who have invested in real estate worth more than €250,000.

Queuing for deduction

To commit VAT fraud, such a popular tool as a tax deduction is used.

“Value added tax is paid by a taxpayer who uses the main taxation system,” explains Polina Gusyatnikova, Senior Managing Partner at PG Partners law firm. Also, the taxpayer should be entitled to a tax deduction.

Photo: Izvestia / Alexey Maishev

VAT is levied on the sale of goods and services in the country; transfer of ownership of goods, provision of services free of charge; performance of construction works for own consumption; import of goods into Russia. In some cases provided for by law, VAT is not charged or is 0%. At the same time, the VAT payer has the right to a tax deduction, which is what fraudsters use.

— The difference between input and output VAT is refundable. For example, an organization is engaged in the export of agricultural products and its input VAT is 0%, but it also purchases agricultural products and pays VAT at 10%, the difference will be the amount of the VAT refund, the expert explains.

Two layouts

Unscrupulous entrepreneurs use several schemes for illegal enrichment.

– The first and most common is the VAT refund for export, when all outgoing VAT is refundable, since there is no input, – says Polina Gusyatnikova. – In such schemes, fraudsters, for example, declare one product, and another goes abroad, or the transaction takes place between front companies, and VAT is refunded from a non-existent product.

There is also a widespread scam with the return of preferential VAT.

Photo: TASS / Valery Matytsin

— For example, a company is engaged in the sale of grain, the VAT on the sale of which is 10%, and transport costs are subject to VAT at a rate of 20%. That is, the outgoing VAT will be greater than the incoming VAT, and 10% of the difference is refundable. This scheme is similar to the previous one in that the goods may not have been produced, the deal is fictitious.

In fictitious transactions, contracts are often concluded between front organizations belonging to the same owner. The transfer of goods, as a rule, does not take place in kind (and the products themselves often exist only on paper).

“However, now such fraud schemes are becoming less and less possible, since when submitting a VAT return, the tax authorities check all invoices in a special program. That is, “scrolling” money just like that, most likely, will not work, – explains the specialist.

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