The Israel Tax Authority has arrested two Israelis on suspicion of forgery and distribution of NIS 80 million in fictitious tax invoices in the name of a number of companies and businesspeople. Haifa Magistrates Court Judge Maria Pikus Bogdanov yesterday extended the suspects' remand until Friday.
The remand request submitted to the court indicates that as a result of information obtained by the Haifa VAT unit, the unit's investigators, went to the Haifa home of the two suspects, Roman Gelman and Roman Teska, in order to conduct a search, but the suspects opposed the search. According to the request, Gelman and Teska refused to allow the investigators to conduct the search, pushed them away from the entrance, and closed the door on them. The investigators later saw that the suspects had begun to leave the scene, chased them, and arrested them. In a search of the house, the investigators saw that files and pads of invoices of many companies, stamps and protocols had been thrown from the window. The investigators suspect that these items were forged in order to commit VAT offenses and money laundering.
The suspects did not cooperate with the investigators, and exercised their right to refuse to answer questions.
Adv. Michael Kashkash from the Goldman & Co. law firm, who is representing the suspects, said in response, "The suspects were arrested illegally, without a warrant, and the Magistrates Court expressed its dissatisfaction with this act. Furthermore, the search conducted in the apartment was conducted under a search warrant issued for a different person, the apartment where the search took place is not the suspects' apartment, and it was conducted illegally. Finally, the evidence seized was taken outside the apartment. The state has no evidence linking the suspects to this evidence and the criminal act attributed to them."
Kashkash added, "The court did not grant the state's request for an eight-day extension of the remand, and allowed the Tax Authority only four days. We have also appealed this remand."
Presumption of innocence: Roman Gelman and Roman Teska are only suspected of the offenses attributed to them. They have been convicted of no crime, and are entitled to a presumption of innocence.
The plan to combat fictitious invoices
This case, and others being investigated as part of the general campaign against fictitious invoices, support the Tax Authority's plan, recently reported in "Globes," to require every business owner issuing an invoice of a business character for over NIS 5,000 to obtain real-time approval online when the transaction is being conducted. As part of the plan, every business issuing a "business" invoice (between two businesses or between a business and a non-profit organization) for NIS 5,000 or more will have to disclose in real time the details of the deal, the amount of money involved, and the businessperson's particulars and those of the buyer to the Tax Authority. The Tax Authority is responsible for issuing an approval for the invoice, without which the VAT on the deal cannot be deducted.
The Tax Authority regards the use of fictitious invoices as a national plague. It believes that billions of shekels in taxes are being evaded using this method, which is fairly simple to apply and difficult to detect.
With this method, someone receiving a fictitious invoice can use it reduce payments to the Tax Authority through periodic VAT deductions, and by increasing expenses in annual tax returns.
The Tax Authority's efforts in recent years to combat fictitious invoices have exposed professional networks that distribute fictitious invoices amounting to hundreds of millions of shekels. The duty to report VAT online does not currently extend to all businesses. If the issuer of an invoice does not report online, the Tax Authority is unable to cross check invoice between the party receiving it and the party issuing it, which leaves an opening for tax evasion.
The model proposed by the Tax Authority, which includes reporting checking, and approval of every transaction in excess of NIS 5,000, is designed to reduce the use of fictitious invoices. The model was recently presented to the Institute of Certified Public Accountants in Israel, the Institute of Tax Advisors in Israel, and the Israel Bar Association, some of which raised important objections to it. The Tax Authority also plans to hold a meeting with Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism) in order to move forward with legislation for the planned measure as soon as a new government is formed.
Published by Globes, Israel business news - en.globes.co.il - on February 27, 2020
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