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Firm Faces $2.8M Tax Bill

The Fiji Revenue and Customs Authority (FRCA) has issued a company a preliminary assessment of $2.8 million which includes a 300 per cent penalty of $2.1m The company is one
04 Feb 2017 11:00
Firm Faces $2.8M Tax Bill
FRCA

The Fiji Revenue and Customs Authority (FRCA) has issued a company a preliminary assessment of $2.8 million which includes a 300 per cent penalty of $2.1m

The company is one of several investigated by FRCA in the Western Division for VAT fraud and systematic tax evasion.

Companies are alleged to have been using fictitious invoices to claim VAT refunds and reducing actual VAT liabilities.

Taxpayers are making fictitious VAT claims for some of its purchases in its VAT returns. “Routine check by FRCA Officers established that VAT trend analysis of the business showed high amounts of VAT claims in 2016.

“In some of the months, the VAT refund amount exceeded the total sales of the business,” FRCA chief executive officer  Visvanath Das said.

In one the examples, the company had made a total VIP claim of $490,940.13 as fuel purchases from a major fuel company, claiming VAT of $40,536.34 from 10 different invoices in its October 2016 Vat return.

However, after verifying with the fuel supplier, it has been ascertained that only one invoice worth $5,181.42 VIP was issued to the said company.

Therefore, the company has made false VAT claims and produced fictitious invoices to justify those claims of $40,108.52 in the October 2016 VAT return for this transaction”, Mr Das stressed.

A total of $706,000 VAT discrepancy has been recorded against the company and is issued a preliminary assessment of $2.8 million dollars which includes a 300 per cent penalty of $2.1m.

In another incident, a construction company is discovered understating its million dollar VAT sales and declaring only $100,000 as sales.

“We continue to discover serious non-compliance behaviors in terms of fictitious claims, under declarations and non-lodgment of VAT returns and due payments. Whilst the authority is encouraging self-assessment and voluntary compliance, it is totally unacceptable that this partnership and trust of the Tax office is being abused.”

FRCA will not tolerate this and offenders will have to face full brunt of the law in terms of prosecutions or to penalties of 300 per cent of tax shortfalls.

No longer should offenders expect any penalty lower than 300 per cent.

Having stated that, it is also evident that some tax agents are manipulating VAT and Income Tax returns for their client’s benefit.

Mr Das added that the accounting fraternity at large is to be responsible to guide the ethics of their profession and ensure compliance in the matters of Taxation and Customs.

Unfortunately, this has not been the case, and time and again there have been collusion between the tax agents and taxpayers to defraud the system.

The authority is in the process of identifying Tax Agents and other representing Agents, who will be taken to task as well.

“These agents who are aiding and abating these fraudulent acts simply need to be put behind bars.” said Mr Das.

“We also encourage our Taxpayers and members of the community to help FRCA identify cases of Tax and Customs evasions. Our consumers play a crucial role in effective tax administration.

“You can always report any non-compliant practices by businesses to us.

“Details with documentary evidence can be emailed to ceo@frca.org.fj.”

Edited by Rosi Doviverata

Feedback:  arieta.vakasukawaqa@fijisun.com.fj

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