This scheme, known as ‘carousel fraud’, exploits the fact trade between European countries is exempt from VAT, according to a story in the Observer newspaper.
Hi-tech goods such as mobile phones and chips for upgrading computers are sold between companies in different countries that are really owned by the same person. The second company is then eligible for a VAT refund from the government.
It is thought dissident and terrorist groups use the scam to launder money from criminal activities at the government’s expense.
Unchecked proceeds from the crime are set to double inside two years.
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