Varga’s response on tax checks indicates VAT fraud, says former tax office staffer

(MTI) – A written response by Economy Minister Mihaly Varga to a lawmaker’s question suggests that major taxpayers are not checked by the authorities, leaving massive VAT fraud uncovered, former tax official Andras Hovath said on Friday.

Horvath, who has claimed that large-scale VAT fraud has gone unnoticed by the tax authority, told the press that Varga’s response showed that the authority had not ordered tax checks even though the tax office and the government had been aware of the problem.

He cited Varga as saying that the involvement of multination trade chains in tax evasion is difficult to prove. The tax authority’s controls over suppliers are impeccable but it is possible that fraud is committed at lower levels down the chain, he added, citing Varga.

Horvath added, however, that this does not prove that the large chains are not involved in tax fraud.

Horvath, referring to a document leaked to the website atlatszo.hu, said that as soon as the suspicion of a key taxpayer’s involvement in an actual fraud case was raised, NAV stopped its investigation and did not launch any checks against the “privileged” taxpayers.

Andras Becker of atlatszo.hu summed up the document as a NAV report from the last quarter of 2010, alleging that during that period eight investigation requests by a now-defunct department in charge of large taxpayers had been rejected. Becker estimated that in 2010 some 30 checks may have been stopped and several more may have been thwarted in the following two years.

Gabor Vago, the lawmaker of the opposition LMP party who submitted the question to Varga, told the press that his party would launch an alternative investigation into the issue next week. They will ask questions from organisations that are obliged to investigate the claims, he added.

The national police headquarters (ORFK) said in a statement on Wednesday that the National Investigation Office (NNI) has ordered an investigation into claims made by Horvath concerning tax and customs authority NAV.

The Municipal Chief Prosecutor’s Office received Horvath’s report on Nov. 13. The prosecutor had asked the police to supplement the report, and the chief of police transferred the case to a police investigations unit on Nov. 27.

On Monday, the competent authority ordered an investigation against an unidentified suspect who is charged with abuse of office.

Horvath told a press conference in November that over one trillion forints (EUR 3.3bn) a year have been missing from state coffers in unpaid VAT with “the support of government circles and the tax authority”. NAV denied the accusations and pressed charges against Horvath for libel.

Source: http://hungarymatters.hu/