Moscow’s tax inspectors now have a new method of discrediting falsified VAT tax deductions – by proving that some companies’ business dealings are fictitious. They confirm that goods are sometimes intentionally sent back and forth between associated companies and can show that the companies are associated with one another based on their registration documents.
According to internal documents from the Moscow tax authorities, a certain company acquired building supplies for shipment to Kazakhstan. A number of middlemen stood in between the manufacturing companies and the final exporter, which greatly increased the prices of the goods. As a result of being passed through this chain of middlemen, the price of metal cutters, for instance, was seven times higher and padlocks nine times higher at the end of the chain than at the start.
The inspectors explained that the owners of the intermediary companies had different last names but were listed as living all at the same address in Moscow or had moved into apartments where other employees of such intermediary companies had lived before. Consequently, registration documents, together with the IP-addresses of the different companies, were one of the methods that the tax authorities used for proving that the companies were associated with one another.