The Federal Tax Administration (SAT) has uncovered a new and “aggressive” tax fraud scheme involving more than 13,000 partners and shareholders of 600,000 companies, many of which are bogus.

Unidentified media organizations and professional soccer teams are among the entities that have avoided paying tax of between 1 million and 120 million pesos (US $50,000 to $5.9 million) each.

Samuel Magaña, a high-ranking auditor at the SAT, told a press conference yesterday that the fraudulent scheme is being used to avoid paying income tax (ISR).

The scheme basically consists of companies contracting supposed suppliers that are in fact bogus companies, which in turn subcontract other ghost companies, creating a chain of simulated suppliers that operate without employees, don’t pay taxes and report minimal profits or losses.

“They disguise not paying this withholding [ISR] to the federal treasury through certain tax applications such as clearances and credits: that is, they generate or simulate tax credits, income tax losses or workers’ wage credits that don’t exist in order to kill the entire [tax] retention . . .” Magaña said.

“We have detected these companies’ chains, their partners and shareholders, their legal representatives, their tax residence, telephone numbers, emails . . . and that allows us to conclude that this is a simulated scheme,” he added.

He said that criminal investigations into some of the fraud cases detected are already very advanced and that prison sentences of five to 15 years could be imposed on those found guilty.

As it detects new fraud cases, the tax administration contacts companies to ask them to voluntarily correct their tax situation and thus avoid being investigated for possible criminal activity.

To date, around 400 million pesos (US $19.8 million) in lost tax revenue has been recovered by the SAT including 161 million pesos from a single tax evader, Magaña said.

Among the irregularities the SAT detected in the fraud scheme were the inclusion of dead people on companies’ payrolls along with employees who supposedly worked for up to 27 companies at the same time.

Source: Milenio (sp)