Unreasonable VAT reimbursement is one of the most common fiscal violations. Last year analysts of the Economic Security Bureau of Ukraine identified UAH 2.1 billion in illegal value-added tax refunds.

Among the illegal schemes used by entrepreneurs the specialists of the Bureau single out three of the most widespread.

The first is fictitious employment of people with disabilities at enterprises. They are documented for work and in this way receive preferential conditions for VAT taxation and the right to apply for budget compensation. In fact these persons do not work.

The second no less common scheme is the declaration of non-existent product balances at the enterprise. Companies import goods then sell them for cash and declare in tax returns that they remained in warehouses. In this way the enterprise receives the right to VAT reimbursement from the State budget.

The third scheme is the creation of a fictitious tax credit by exporting companies. They buy goods for example, cereals, for cash. Then they export them making a profit and apply for a budget VAT refund to the State Tax Service.

In order to counteract such violations specialists of the ESBU constantly analyze the economic activity of Ukrainian enterprises and send their recommendations to the authorized bodies of state authorities in particular to the State Security Service. In 2023, 71 such recommendations were sent and 112 analytical products were created.