The Prosecutor's Office has uncovered a scheme involving fictitious procurement in the road sector worth more than 1.1 billion hryvnia
Law enforcement officials are investigating a large-scale VAT evasion scheme in the road construction industry. According to the investigation, through fictitious purchases of construction materials, a number of affiliated companies generated an illegal tax credit, resulting in budget losses of over 243.8 million hryvnias.
According to the investigation, between 2020 and 2023, five companies linked to the beneficiary of a major road construction company documented the purchase of bitumen, crushed stone, and other materials for road construction and repair totaling over 1.1 billion hryvnias.
However, as investigators established, no actual deliveries took place. The companies that allegedly supplied construction materials were in fact operating in entirely different sectors and traded in food products, footwear, automobile tires, and metal rebar.
Investigators believe that through such fictitious transactions, the companies generated tax credits, which allowed them to significantly reduce their tax liabilities. As a result of these actions, preliminary estimates indicate that the budget lost over 243.8 million hryvnias in value-added tax revenue.
In addition, law enforcement officials established that these companies conducted financial and business transactions with a major road construction company totaling more than 4.3 billion hryvnias. According to the investigation, genuine business transactions were combined with fictitious ones, which allowed for the legitimization of “paper” documents and the creation of the appearance of lawful activity.
The fact of intentional tax evasion is confirmed by the results of tax audits and the findings of forensic examinations.
Currently, one of the company’s executives has been notified of the charges in absentia. Law enforcement also conducted a search of his residence. Two other individuals implicated in the case are outside Ukraine, and law enforcement agencies are taking steps to bring them to justice.
The Office of the Prosecutor General emphasizes that it supports the development of legitimate business and the creation of new jobs; however, tax evasion during the execution of multi-billion-hryvnia government contracts is unacceptable.
According to law enforcement officials, the nearly 244 million hryvnias that were not remitted to the budget could have been used to fund defense, security, healthcare, education, and the country’s recovery.
The pre-trial investigation is ongoing, according to the press service of the Office of the Prosecutor General.
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