From: hetq online — investigative journalists
Organized crime in Sweden has found a new way to work around regulations, and is raking in millions through tobacco tax fraud. According to the Helsingborg Dagblad newspaper (HD), between 2009 and 2011 12 cigarette import companies robbed the state of €64 million (US$81.3 million) in tobacco taxes. Tax fraud is increasingly replacing conventional cigarette smuggling.
Frecor Tobacco Import AB and Asgari Import & Export AB, two companies in Helsingborg, southern Sweden, robbed the state of SEK141 million (US$20.3 million) in taxes, the newspaper reported. Both firms have since gone bankrupt and their respective registered owners, Bernt Eriksson and Fadi Haidar Ahmad, are on the run. Eriksson was last seen in Thailand in 2010, and Ahmad is believed to be hiding in the Middle East.
According to HD, the two firms are linked to a Stockholm company that withheld another €10.5 million (US$13.3 million) in taxes.
Tax fraud is easier to pull off than traditional smuggling in several ways. First, companies purchase cigarettes, import them legally into Sweden and store them in warehouses. From the date when the cigarettes arrive at the warehouse, the importers have 72 days to declare them to the tax authorities. Up to this point, everything is legal.
The trick is selling the cigarettes before the time limit is reached. Since the cigarettes are indistinguishable from other legally imported cigarettes, they cannot be tracked. Because they are skipping out on taxes, the importers sell their cigarettes at lower than normal prices to win over customers – and still make a large profit.
By the time the authorities discover the fraud, people running the operation are gone, and so is the money. Usually a “dummy” chosen to represent the company takes the blame.
While searching the car of a man convicted for economic crimes and links to organized crime, in Gothenburg in 2005, authorities came across a how-to plan which explained the tobacco tax scheme, according to the newspaper. The first cases of this type of fraud were recorded in 2007, and the number of cases has risen since.
