Invoicing scam
THE Fiji Revenue and Customs Authority has uncovered a scam where companies hire graphic artists to manipulate the value of overseas invoices.
Speaking on the global move towards greater financial disclosure, FRCA director corporate services Fazrul Rahman said a Fiji company was under the microscope for incorrect invoicing.
“This Fiji company has set up a limited party company in Australia that is buying food and supplying it to the Fiji company, or buying from China and the goods are physically coming on the ship from China but the invoice is coming from Australia,” he said.
“So it says the company in Australia is in charge of procurement. But the point here is the value of invoice can be manipulated and understated.
“What’s equally concerning is the invoices based on which money is being paid. People are taking advantage, or maybe there are elements within the banks — not at the top level — and maybe there are loopholes in the system, but they go to five different banks to make that one payment.
“This is happening and is under discussion because its not tax evasion only, it’s about money laundering as well, trying to siphon out money.
“And that’s why we are serious about putting people behind bars.”
Mr Rahman said with the global move towards greater financial disclosure, Fijians can expect tougher tax laws in the near future.
He said the increased effort towards tax transparency would also see finance ministers from countries all over the world ratifying a multilateral instrument on tax transparency next month.
Speaking at the 2017 annual conference of the Fiji Institute of Internal Auditors, Mr Rahman said in any setting — private or public — there has to be a tone towards sustainability and success.
“The tax laws in time to come is going to be more stronger than what we have now,” he said.
“Gone are the days when people can keep money in tax haven.”
He said the multilateral instrument on tax transparency would be signed by countries who wanted to protect their revenue base.
Governments wanted to know where their citizens were investing money, he added, citing the FATCA law (The Fair and Accurate Credit Transactions Act) in the United States, designed to improve the accuracy of consumers’ credit-related records
He said the Global Forum on Tax was also a multilateral framework aimed at transparency and exchange of information for tax purposes.
The Base Erosion Profit Shifting (BEPS) also addressed international tax challenges.
Mr Rahman said recent tax audits revealed weak financial management systems and tax fraud was on the rise.
As a result there has been a wave of regulatory changes here in Fiji, he said. These included the listed companies, Crimes Act, Anti-Corruption Laws, New Companies Act, Tax Laws, New Tax Administration Act, New Income Tax, Proceeds of Crime Act, Unexplained Wealth, and Anti-Money Laundering.
‘For the declaration of overseas investment, there was amnesty, but going forward you need to declare income from that asset.
“If you drive around you will see people living lifestyles beyond their earning capacity. So there are laws on unexplained wealth and there will be an aggressive move for tax compliance.”
