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Clampdown on building fraud reaps 200m in tax revenues

A five-year crackdown on those who pay under the table in the construction sector resulted in hundreds of criminal charges.

Veronumerollinen henkilökortti.
Image: Jarkko Riikonen / Yle

The Tax Administration estimates it has recovered up to 200 million euros in tax revenues that would have been lost to the grey economy. The money was tracked down during a five-year crackdown on those who pay under the table in the construction sector.

Chief Inspector Pekka Muinonen, who led the project, says it was beneficial in many ways and will be continued.

“I’d say that whereas in the past the risk of getting caught was small, now it has become very likely that someone will get caught if they make mistakes such as not paying taxes,” says Muinonen.

Muinonen says that the gap between the annual volume of work in the building sector – estimated at 29 billion euros – and the actual taxes and fees derived from it remains too large, so there is still plenty of work to do.

“We’re talking about a tax shortfall of more than a billion euros annually,” he says.

The project, known as “Raksa”, operated between 2008 and 2012. During that time 3525 tax audits were carried out. Evidence of grey economy dealings was found in about one third of cases. Criminal charges were filed in about one-tenth of cases. Of these, 264 were prosecuted as cases of aggravated tax fraud.

Some 90 percent of all cases involved companies with annual turnovers of less than six million euros. Fake receipts and invoices were found to the tune of 112 million euros. For a total of 4857 workers, employers had failed to pay withholding taxes adding up to 220 million euros. Some 92 million euros’ worth of unreported dividend payments were also uncovered.

The investigations brought tax officials 144 million euros in direct taxes and about 70 million euros in value-added taxes.

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