Amendment fails to root out illegal dealing in receipts among construction firms

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The buyer liability legislation introduced at the beginning of the year has failed to root out the use of illegal labour and the related dealing in counterfeit receipts from Finnish construction sites, believe experts interviewed by Helsingin Sanomat.
      According to the Finnish Construction Trade Union estimates, there are around 20,000 illegal workers within the Finnish construction sector. Because of the use of grey labour, taxes and insurance payments worth in excess of EUR 300 million remain unpaid each year.
     
The law requires that a construction company make sure its subcontractor firms deal with their taxes and other payments correctly. In the construction business, however, the subcontract chains can be long, and the liability only extends to cover the next link of the chain.
      Only five inspectors have been appointed to oversee the realization of the law on the construction sites, and they do not have the right to obtain information from the tax authorities.
      The use of short-lived companies is the easiest way to evade the law. By August, no less than 1,100 construction branch limited liability companies had been established in Finland this year. This is 300 more than during the same period last year.
      "Of these companies, 450 were set up to continue the shady business activities of persons already having a sloppy trading history. The new company has a clean sheet – at least for a while", says Markku Hirvonen, a grey economy expert from the Ministry of Finance.
     
The receipt-dealing rings related to the use of illicit workforce have spread their operations from the capital area to other parts of Finland as well. The dealing in receipts is needed in order for companies to have an explanation for the expenses accrued from the paid salaries from which taxes have not been withheld.
      Despite the growing number of uncovered tax fraud cases and the subsequent convictions in recent years, the grey economy is still thriving. Last year there were already 429 convictions in such cases. But, in only eight of the cases were sentences of unconditional imprisonment passed.
      "When one ring is shot down, another one will take its place immediately", explains Det. Insp. Markku Ranta-aho from the National Bureau of Investigation (NBI).
      More and more often members of criminal organisations are a party to the companies tailoring receipts. Organised crime has discovered a profitable, low-risk business in receipt manufacturing. "If caught, the sentence passed does not compare to one received from smuggling ten kilograms of amphetamine."
     
Next Wednesday the Helsinki District Court will start processing what is thus far the largest case of dealing in receipts in the Finnish construction business. The number of the accused is nearly a hundred, in a case involving in excess of two hundred firms.


Previously in HS International Edition:
  Illegal labour coming from more and more distant countries (5.2.2007)

Links:
  The Finnish Construction Trade Union
  National Bureau of Investigation

Helsingin Sanomat