Pivdenoukrainsk Company Faces Court Investigation for ₴6M Tax Evasion Scheme

A company from Pivdenoukrainsk is suspected of using fictitious companies for tax evasion and money laundering. The court has granted investigators temporary access to items and documents related to financial fraud involving officials of a local joint-stock company.

This is evidenced by the ruling of the South Ukrainian Court.

According to the investigation, in 2015-2016, unidentified persons, acting in collusion with the management of the company, organized a scheme of fictitious non-commodity transactions with a number of companies created specifically to cover up illegal activities. Through contracts for the supply of allegedly rock mass and crushed stone, the company illegally formed a tax credit and evaded VAT.

Participants in the scheme, including a representative of the so-called "conversion and legalization center," cashed out the funds and delivered them to the company's management. During the investigation, law enforcement officers seized almost UAH 6 million, which, according to the investigation, was cashed out for further misappropriation.

Law enforcement officers established that a number of fictitious companies were controlled by the actual head of the PJSC, who formally held the position of the chairman of the supervisory board.

In 2017, the company changed its legal form to become a private joint-stock company instead of a public one. Investigators believe this change was an attempt to cover up the traces of financial fraud.

A tax audit revealed that in 2016 the company artificially overstated its tax credit by almost UAH 4.8 million. Its employees allegedly bought goods and services from companies that had signs of fictitiousness, but in fact they existed only on paper. The tax returns of these counterparties were invalid, and the transactions themselves were fictitious.

The investigation believes that in this way the company tried to reduce the amount of taxes it had to pay to the budget. To confirm or refute these facts, the investigators asked the court to provide access to the company's documents. The court granted the request. If the documents are not provided voluntarily, the investigators will obtain a search warrant.

The investigation is ongoing under the articles on fictitious business, money laundering, tax evasion and embezzlement on a large scale.

The businessman from Mykolaiv region also evaded taxes for four years, hiding more than UAH 35 million in income. According to the investigation, he registered his business as an auxiliary activity in crop production, but in fact he was engaged in the purchase and sale of agricultural products, crushed stone, sand and the provision of transportation services using his own fleet of vehicles.

In February, a Mykolaiv court found no grounds to detain the suspect in a case of tax evasion in the export of agricultural products. The total amount of losses in the case amounted to almost UAH 2 billion. In 2022, the suspect, being a director of a company, exported agricultural products, evading taxes.

Recently, a court in Mykolaiv region ordered the seizure of property, including funds and agricultural machinery, which was allegedly taken out of the company illegally.

Анна Бальчінос