The SBU suspended activity of a large-scale conversion center in Kyiv city. Its turnover tops UAH 15 billion (USD 526,000).

The center was operating during 2019-2020. The offenders registered more than 400 bogus companies. With its help, thousands of state and municipal enterprises evaded taxes in especially large amounts.

Officials of commercial banking institutions and former officials of the State Tax Service are involved in this scheme. In particular, they enabled the customers to bypass automated risk assessment monitoring system. Thus, the offenders could exploit the vulnerabilities of information and telecommunications systems of the State Tax Service and as a result - to evade taxes.

During the authorized searches in offenders’ offices and residences, law enforcement officers found over 600 seals of bogus firms, offshore companies, notaries, tax authorities, courts and local self-governments. The law enforcement also uncovered foundation documents of bogus companies, documentation on their financial and economic activities, power of attorney, copies of passports (so-called “pounds”), which such entities were registered on.

This conversion center was part of a global illegal mechanism for VAT tax credit generating, previously blocked by the State Tax Service.

The investigation is ongoing.

We recall that the SBU jointly with the Prosecutor General’s Office, the State Tax Service and the State Financial Monitoring Service conducted a special operation to expose and block the illegal scheme of generating of VAT tax credit for entities.The scheme was organized by Patrol Police employees.

Allegedly, during its existence in 2019-2020, this scheme was causing the state losses of more than UAH 2 billion (USD 71.4 million) per month.