TALLINN - In the last 10 months the Tax and Customs Board has carried out over 3,000 audits of VAT refund claims, assessing an additional 38.7 million euros in tax, Estonian Public Broadcasting reports.
According to the Tax and Customs Board press release VAT refunds on car sales, businesses dealing in gold in cast form, and real estate transactions are the most problematic areas.
Kaido Lemendik, the head of the Audit Department, said that in recent years many cases have been uncovered where entrepreneurs have purchased flats or refurbished flats, claiming the costs as business expenses. “These kinds of claims are condemnable and VAT will not be refunded,” said Lemendik.
The Tax and Customs Board highlights an example where a business claimed 78,000 euros in VAT refunds for building work on a private house on land belonging to a board member. In an unannounced inspection, the Tax and Customs Board discovered that building work on the mentioned house had been done beforehand and the board member’s family resided there.
In another case, a company declared renovation costs on rebuilding a flat into an office. An inspection found some of the renovation costs to be fictitious while the flat had not been turned into an office at all. The company was ordered to pay 3,000 euros in VAT and a further 4,400 euros in income tax.
“Tax and Customs Board will continue to focus on personal expenses and unpaid taxes will be recovered with interest,” said Lemendik.