“Scheme of Mariupol”. Authorities have uncovered VAT fraud in the occupied regions of Ukraine
Tax incentives introduced by the Russian government for the annexed regions of Ukraine turned out to be a “gold mine” for dubious businessmen.
Dozens of businesses in Mariupol, which was seized by the military in late May and formally declared Russian territory in the fall, have been involved in VAT evasion fraud, a source close to the tax office told The Moscow Times.
At the moment, the Federal Tax Service, together with investigators from the Main Directorate of the Ministry of Internal Affairs of Moscow, has launched an investigation into the “Mariupol scheme”. According to the interlocutor of The Moscow Times, several criminal cases have been opened for fraud, and those involved in this scheme are being questioned in Moscow as witnesses.
Companies that were engaged in construction work in Mariupol and the purchase of materials are suspected of not paying VAT, a source tells The Moscow Times.
On September 30, Russian President Vladimir Putin signed a law on the annexation of the occupied regions of Ukraine. Until then, the Ministry of Finance considered Mariupol foreign territory and allowed non-payment of VAT. For example, transport and construction services from Russia to Mariupol have been recognized as “international freight transport” services, according to the FTS letter. Construction works in the city had the same status.
On September 30, 2022, the DPR, LPR, Zaporozhye and Kherson regions were recognized as the territory of the Russian Federation, and from that moment on, deliveries of goods to these regions ceased to be exports for the Federal Tax Service, explains Wiktoria Varlamova, head of the consulting department of Pravovest Audit.
Late last year, the Russian budget faced a sharp increase in the VAT shortfall – a key tax that provides for every fifth ruble received by the federal treasury.
VAT debt for the year increased by 40%, or 286 billion rubles, and reached 1.019 trillion rubles as of January 1, according to Rosstat statistics.
The total debt of enterprises due to taxes and fees to budgets of all levels in 2022 jumped by 27%, or 541 billion rubles, to 2.53 trillion rubles.