The AADE investigation showed that behind the Chinese companies were a software company with a Greek legal representative, and two Chinese residents of Slovakia, who provided technical support for the offenders, “altering” their cash registers. It all started when anonymous complaints reached AADE, regarding illegal practices in a company based in Komotini, in another based in Larissa, and in a branch in Thessaloniki. Specifically, the complaints related to an unreadable QR Code on receipts.
In fact, AADE’s readability check showed that the complaints were true, while further examination showed that documents were being sent with smaller amounts than what actually applied. The method of mystery shopping followed, where Authority officials impersonated customers in the stores in question. In fact, in order to catch the offenders in the act, specialized personnel intervened technologically in the system, reducing the transmission time of the FIM Data from 24 hours to one minute, so that at the same time of the transaction the AADE executive might be compared with the Z of cash register.
Subsequently, through e-send, the supplier of the illegal mechanism was identified, and thus the network of his customers unfolded, which consists of 287 businesses, all of which operate in the retail trade and are owned by Chinese nationals.
For the month of February alone, the audit showed that 220,000 receipts had been sent, which recorded a total amount of 3 million euros, with the actual turnover, however, being several times higher, since when the payment method was cash, the reduction of the indicated value in relation to the real one reached 90%. A typical example is a receipt worth 21.90 euros for which the amount of… 2.1 euros was nevertheless sent.
According to the presentation of the case by the commander of the AADE, Giorgos Pitsilis, the true size of the tax evasion is still unknown as the controls continue but it is expected to reach unimaginable heights.
In summary, from the investigation that followed, it was found that:
• The specific companies transferred to AADE amounts reduced by 90% in relation to the actual value of the receipts, through the transfer of the decimal point by one decimal place.
• Both these companies and 285 others are Chinese interests, and had procured hardware and software from the same suppliers.
• The two companies have Chinese managers, residents of Slovakia, a common representative, a Greek with a history of participation in companies with suspicious tax behavior, and a common accountant with their suppliers.
• All businesses have up to 16 branches per VAT number.
• All businesses had issued, within 27 days, 220,000 receipts, with a total declared value of more than 3 million euros.
• When the payment is in cash, this payment method is selected in the mechanism and the value is transmitted reduced by up to 90%.
• When the payment is by card, this payment method is selected and the value is transferred to the full amount.
How the operation codenamed Paper Dragon was organized
The continuation of the operation included an on-site inspection of the businesses with simultaneous intervention at 11 points throughout the country, from Attica and Komotini, to Larissa, Karditsa and Kos. 9 researchers, 32 AADE auditors, 4 K.Y. executives participated. and 2 prosecutors. The operation encountered obstacles as there was difficulty in locating the suspects and the requested evidence. Thus, the auditors decided to go to the headquarters of the engineering support company, the two Chinese and the Greek.
In order to ensure that they would be located in the business area, a fake delivery of parcels was organized with the cooperation of the storekeeper, in which the Greek and the one Chinese attended, who were caught and interrogated giving valuable information. The subsequent search of their homes yielded even more data, while the relevant officials extracted further evidence by cracking passwords to encrypted files. Servers, databases and other equipment were seized.
The final blow to the circuit was given when 3 days later the Chinese confessed in a letter, where he accepts his guilt. This was followed by a prosecutor’s order for tax and other audits of the companies involved, which are still ongoing. The penalties that await them are extremely heavy, as they face, among other things, the suspension of operations, as well as fines of 15 times the average of the declared income of the last three years.
The fines facing the illegal software company are even greater as it is required to pay, in addition to income tax and VAT, a fine of 100,000 euros for each company involved, i.e. a total of 287,000,000 euros. However, the case is ongoing and more data is expected in the near future.
Seized in total:
• Copies of server contents
• Database files
• Hard drives
• USB
• Computers
• Tax mechanisms
• Printers
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