August 8, 2019 / 3:47 PM / 12 days ago

Colombia arrests eight, breaks up $670 million VAT fraud 'cartel'

Colombian President Ivan Duque addresses the audience about VAT fraud 'cartel' next to Minister of Commerce Jose Manuel Restrepo, in Bogota, Colombia August 8, 2019. Courtesy of Colombian Presidency/Handout via REUTERS

BOGOTA (Reuters) - Colombia has broken up a criminal network which helped companies evade some $670 million in value added taxes over the last 12 years, President Ivan Duque said on Thursday, in an operation he said was a “really hard hit” to corruption.

Eight people in three cities were arrested in the operation - a collaboration between police, tax authorities, the attorney general’s office and the president’s transparency secretariat.

Duque did not name any of the companies accused of involvement in the scheme.

“Today we can say with all clarity that the VAT evasion cartel - one of the biggest of this type of cartels in the country - has fallen,” Duque said in a televised statement.

The group used 15 fake businesses to falsify receipts meant to reduce company tax obligations. It also faked documents showing VAT reimbursements.

“These operations are producing a huge harm to the finances of our country, they are resources which weren’t being collected,” Duque said. “This is an important victory against corruption and in the fight against tax evasion.”

The country collected some $42 billion in taxes last year.

The evaded funds could have constructed 10 hospitals, quintupled the sports budget or financed the entire agricultural sector for a year, according to government calculations.

Corruption is considered one of the biggest drains on the Andean country’s economy and a major impediment to further economic development and investment in sectors like public heath and education.

Reporting by Luis Jaime Acosta; Writing by Julia Symmes Cobb; Editing by Susan Thomas

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