Italian police authorities raided about 150 companies in eight different regions of Italy earlier in December related to as much as $662 million in VAT tax-evasion scams; operations that came a few weeks after Italian Power Exchange (G.M.E), as well as other European registries, halted all trading in carbon credits due to a high number of abnormal transactions, according to EuroWeeklyNews.com.
Europol issued a warning in 2009 about the VAT-fraud that is draining from European taxpayers an estimated $6.62 billion. Basically, the credits are purchased in a VAT-free zone, and then sold in a transaction that calculates VAT, but the tax is never paid to the host country. Law enforcement authorities around Europe have made more than 100 arrests in 2010.
The actions are part of ongoing investigations into carbon trading scams within the EU ETS. The suspicious trading activities were noted in late 2008, and EU states were authorized to change their taxation practices in September 2009, and many did that.
Europol is now investigating the potential that the same scheme has moved in other energy markets, according to the EuroNewsWeekly report.
Rob Wainwright, Director of Europol said: “Organised VAT fraud remains a significant criminal activity in Europe. It is responsible for draining huge resources from central government revenues and undermining the objective of transforming Europe into a competitive and greener economy. … Europol is also currently monitoring apparent new trends in this criminal activity, including possible organised crime infiltration of the gas and electricity markets.”