Fighting VAT fraud: the Bulgarian experience

This paper draws on the experience of Bulgaria in identifying the types and modus operandi of VAT frauds with a focus on the abuse of tax credit. It analyses the elements of tax design permissive of such abuses and discusses the possible solutions in the light of the international and domestic experience and the capacity of the tax dministration. It offers a critical analysis of the Bulgarian anti-fraud device the VAT account, as well as the various alternative policy and administrative measures proposed or applied as barriers to abuse of VAT credit, including those pertaining to the domain of commercial registration, or those related to indicative “market” prices of commercial transactions. The study concludes that the possible solutions should be sought along the lines of optimizing risk management and the principle of joint liability rather than through tighter controls at entry and on the conduct of business

Fighting VAT Fraud: The Bulgarian Experience

This paper draws on the experience of Bulgaria in identifying the types and modus operandi of VAT frauds with a focus on the abuse of tax credit. It analyses the elements of tax design permissive of such abuses and discusses the possible solutions in the light of the international and domestic experience and the capacity of the tax dministration. It offers a critical analysis of the Bulgarian anti-fraud device the VAT account, as well as the various alternative policy and administrative measures proposed or applied as barriers to abuse of VAT credit, including those pertaining to the domain of commercial registration, or those related to indicative “market” prices of commercial transactions. The study concludes that the possible solutions should be sought along the lines of optimizing risk management and the principle of joint liability rather than through tighter controls at entry and on the conduct of business.VAT fraud VAT account

BIG DATA ANALYTICS FOR FINANCIAL FRAUDS DETECTION

Criminals and criminal organizations often make use of companies and other corporate entities to hide their identity, conceal illicit flows of money, launder funds, finance terrorist organizations, evade taxes, create and hide slash funds, commit bribery, corruption, accounting frauds and other financial crimes. These legal entities are frequently organized into complex ownership schemes set up in different countries, and with a “Chinese boxes” structure, in order to make it harder to determine who ultimately controls them and benefits of the illegal conduct. Currently there are a lot of competitors in the market of Financial Fraud Detection but the software that they propose are mainly oriented to supervise and manage the institutions’ internal compliance processes such as the management and transmission of Suspicious Activity Reports (SAR) instead of providing intelligence tools for proactively discovery potential threats and identify the final beneficiaries of illegal operations. Consequently there is a potential for Financial Fraud Detection focused on the on-line, real-time statistical analysis of transactions, operators behaviour, price movements and the use of data mining algorithms that work on heterogeneous sources of big data. After having described the schemes used for executing the three most relevant financial frauds this research proposes a novel approach for the detection of illicit behaviours and suspect transactions. The approach benefits of a multidisciplinary approach for the analysis of the big data streams coming heterogeneous sources such as TV stream, social media and public (official and unofficial) data bases

Complicity functions for detecting organized crime rings

Graph theory is an evident paradigm for analyzing social networks, which are the main tool for collective behavior research, addressing the interrelations between members of a more or less well-defined community. Particularly, social network analysis has important implications in the fight against organized crime, business associations with fraudulent purposes or terrorism. Classic centrality functions for graphs are able to identify the key players of a network or their intermediaries. However, these functions provide little information in large and heterogeneous graphs. Often the most central elements of the network (usually too many) are not related to a collective of actors of interest, such as be a group of drug traffickers or fraudsters. Instead, its high centrality is due to the good relations of these central elements with other honorable actors. In this paper we introduce complicity functions, which are capable of identifying the intermediaries in a group of actors, avoiding core elements that have nothing to do with this group. These functions can classify a group of criminals according to the strength of their relationships with other actors to facilitate the detection of organized crime rings. The proposed approach is illustrated by a real example provided by the Spanish Tax Agency, including a network of 835 companies, of which eight were fraudulent

MISSING TRADER INTRA-COMMUNITY AND CAROUSEL VAT FRAUDS - ECJ AND ECtHR CASE LAW

This paper explains what missing trader intra-Community and carousel frauds are and how they are performed. A fault in taxing intra-Community supplies with value added tax (VAT) enables these frauds to take place. Member States and the European Commission are aware of the fault but are unable to agree on how to change the taxation of the mentioned supplies. Therefore, the fi ght against these frauds is conducted by improving tax inspection, tax cooperation between Member States, imposing liability on persons participating in the transactions in which these frauds occur, and disallowing the deduction of input VAT. The European Court of Justice and the European Court of Human Rights have dealt with liability and deduction cases. They have decided that closing the tax gap by recovering VAT from persons participating in the transactions is legal if it is done in accordance with the so-called knowledge test

The Janus-Faces of Cross-Border Crime in Europe

Europe is changing rapidly, which may also have a bearing on its criminal landscape. This does not mean that all sorts of new crime are emerging: a large part of the crimes remains profit-oriented and is committed by known modus operandi. That is the old face of crime. Amidst the traditional landscape new faces of crime can be identified. The internet is such a new face which emerges among others in the sex industry. This is as old as the human race, with all the related abuses and exploitation. But the internet gives it also a new face because of its broad reach and related opportunities, negative as well as positive. This volume provides other examples of this two-faced Janus head of crime. Old criminal trades, such as the illegal cigarette market, synthetic drugs and criminal exploitation of human labour, but also new criminal specialisations, new professional and industrial skills developed by ‘old’ ethnic minorities on various crime markets in central Europe. Meanwhile, the on-going illegal migrations continue to exert their influence on the perception of crime: while the actual prevalence of most types of crime decreases, fear of crime continues to increase. The flow of migrants is unrelated to this outcome but it impacts nevertheless on the perception of crime. This volume of the 18th Cross-border Crime Colloquium, held in Bratislava in the spring of 2017, contains the peer-reviewed contributions of 22 European experts and up-and-coming researchers. Their chapters cover a broad field of crime in which the double faced Janus head can be discerned: illegal migrants, criminal markets, corruption, money laundering and organised crime, highlighting many new aspects