Four charged with fraud in UAE-Europe VAT case (Not Sharia Compliant)

The National staff

• Last Updated: May 08. 2009 12:34AM UAE / May 7. 2009 8:34PM GMT

DUBAI // Four men have been charged with involvement in a major fraud case that bears similarity to the complex carousel fraud that has plagued the UK tax system.

The Dubai Attorney General, Issam al Humaidan, yesterday referred two Europeans and two Asians to the Dubai Misdemeanours Court on charges of money laundering and forgery involving the illegal transfer of £150 million (Dh830m) between the UAE, the UK and the Netherlands.

Mr al Humaidan said in a statement that information received by the Anti-Organised Crime Department uncovered suspicious transfers of large sums of money between the accused and accounts in the UK and the Netherlands.

The two-year investigation revealed that the transfers resulted from fraud committed against the UKs Inland Revenue and Customs and Excise, as well as the Netherlands Antilles Islands.

The four men are accused of importing goods into the UK and trading them commercially without the proper licence.

They then allegedly re-exported the goods and filed a claim with the UK government to recover the 17.5 per cent value added tax (VAT) on the total value of the goods.

To complete the carousel, the accused then brought the goods back into the country via various channels with the help of companies they owned in the UAE, the investigation claims.

According to Mr al Humaidan, the accused regularly changed the names and activities of their companies in an effort to hide their illegal activities.

He said the accused also transferred large sums of money through individuals and money exchanges to various individuals in a suspicious manner.

The public prosecution set up a technical committee made up of the Anti-Money Laundering and Suspicious Cases Unit at the UAE Central Bank and the Economic Crimes Section at Dubai Police CID, to prepare a report on the total sums transferred and the parties who received the money.

Missing trader or carousel frauds are rampant in the EU, costing the British government billions of pounds a year in lost revenue.

Much of the fraud involved parties based in the UAE, UK tax officials have said in the past. Under the fraud, a quantity of goods is traded between two countries in a customs union, such as the GCC or EU. VAT is not applied to goods traded between the countries, but is added to the price of goods that are resold in the country in which they arrived.

The company that resold the goods at a VAT-inclusive price disappears, failing to pass on the tax revenue to tax officials. The company that bought the goods re-exports them, often changing identification numbers, and claims back the VAT that was not paid in the first place.


* The National