Tax fraud – latest global update

tax fraud latest from around the world

13th July 2023

Two famous Croatian footballers charged with perjury in their homeland, several cases of tax fraud and some key developments with the euro and its digital equivalent – plenty of variety and lots to ponder in the world of tax compliance this month! The clear message from these stories is that authorities around the world are showing no signs of slowing down in their mission to clamp down on tax evasion and illegal or fraudulent activities. As always, we keep you abreast of all the latest tax and compliance news that you need to be aware of and reiterate the importance of adhering to local regulations when placing contractors abroad.

First up, tax authorities in India recently uncovered an Rs13 crore (almost £1.25m) tax refund scam involving bogus returns in the cities of Visakhapatnam and Rajahmundry, both in the southern coastal region of Andhra Pradesh. This isn’t the only example being investigated with yet more illegal activity also recently exposed in the cities of Hyderabad (Telangana state) and Vijayawada (Andhra Pradesh). Indeed,  the level of fraud in the aforementioned was even greater, to the value of Rs40 crore (around £3.8m). A total of 10 tax consultants and a number of employees have been implicated in both cases.

The ’menace’ of global tax fraud

Indian tax authorities have had their work cut out and the scale of their job was highlighted in another Times of India news story. This time their attention has been diverted to the rise in false Goods and Services Tax (GST) registrations, a widespread practice across states, including Goa. Here, bogus invoices using PAN cards and Aadhaar identities are issued to claim tax credits, defrauding the Exchequer. “This menace of fake registrations and the issuance of bogus invoices for passing of fake input tax credit has become a serious problem…causing revenue loss to the government,” said tax commissioner, S Gill.

Authorities in neighbouring Pakistan have also had to deal with a number of false tax invoices submitted by a local company from 2019 to 2022. As part of its drive to target those responsible for carrying out tax fraud, the Directorate of Intelligence and Investigation (IR) in Lahore has redoubled its efforts to bring those involved to account. In this particular case, company officials had claimed tax credits on purchases that hadn’t been made, by including debit and credit notes on their sales tax returns. The IR has subsequently issued notices under section 378 of the country’s Sales Tax Act of 1990.

Meanwhile, Croatian footballing superstars Luka Modric and Dejan Lovren, who both plied their trade in the Premiership for Spurs and Liverpool respectively, stand accused of false testimony. This relates to the evidence they supplied about the taxes of their multi-million transfers in the original 2017 corruption trial of Zdravko Mamic, an ex-director of Dinamo Zagreb, their former club. While the accusations had subsequently been lifted ahead of the 2018 World Cup in Russia, the two players have now been charged once again. Mamic had been sentenced to six and a half years but fled to Bosnia.

In other news, Bulgaria will adopt the euro in 2024 as a parallel form of payment alongside the lev. As reported by, the decision was confirmed by finance minister Asen Vasilev, who acknowledged the need for change given that “we as people can’t make deals in euros, nor can we receive our salaries in euros”.  The Balkan nation wants to avoid sizeable conversion costs while granting the option of dealing in both currencies, following in the footsteps of other nations such as Montenegro and Kosovo, both of which use the euro without being fully fledged EU members.

As a result of growing customer demand for electronic payment forms, the EU has also introduced a proposal for a digital euro, a secure form of payment which would be issued by the European Central Bank (ECB). This would be an alternative to cash, allowing individuals to pay for goods via a card or phone app in the usual way. But as the article stresses, steps must be taken to ensure that it is safe and trusted, addressing financial stability and any data protection concerns, “preventing the digital euro from having any potential negative influence on deposit levels and banks’ capacity to lend”.

Not adhering to local tax regulations can land recruitment businesses in hot water and lead to severe penalties. If you’re placing contractors abroad and are struggling to understand your compliance and legal obligations, our 6CATSPRO experts can help you navigate this often very complex terrain.

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