Latvia loses EUR 2.8m in tax evasion scheme by car dealers

A major tax evasion scheme, which the Latvian tax authority busted earlier this month, has caused an estimated 2.8 million euros loss to the government budget, the financial police department of the Latvian State Revenue Service informed Thursday.

Over the past three years, an organized group of three dealers had been using shell companies to sell expensive motor vehicles and household equipment without paying value added tax (VAT).

Edijs Ceipe, head of the revenue service's financial police department, said that the dealers used Latvia-registered companies to purchase BMW, Lexus, Mercedes and Porsche autos in Germany in the name of the non-existent firms that were liquidated soon afterwards.

From January 2016, the group used the data and bank accounts of more than 30 such shell companies to create complex chains of fictitious transactions, allowing them to avoid paying more than 2.8 million euros in value added tax.

The organizer of the VAT scam has been taken into custody but his two accomplices remain free for the time being.