The European public prosecutor’s office has discovered a tax evasion scheme worth at least 300 million euros in Belgium through the sale of products from China. The fraudsters used Liege Airport, where Alibaba also has a logistics hub, among other routes.
Silk Road fraud
On Tuesday, the European prosecutor’s office arrested four suspects and carried out ten searches as part of an operation dubbed “Silk Road”. A network allegedly evaded at least 300 million euros in taxes via the port of Zeebruges and Liege Airport. Other charges include forgery, money laundering and participation in a criminal organisation. During the searches, electronic devices, four cars and a dozen bank accounts were also seized.
For years, these Chinese exporters had evaded Belgian import taxes by declaring that consumer products (such as electronics, toys and accessories) were destined for other EU Member States. They were thus exempted from Belgian VAT. A multitude of front companies in France, Germany, Hungary, Italy, Poland and Spain enabled them to work with false invoices and fake transport documents. Sometimes they even used the identity of real companies without their knowledge.
Consumers, on the other hand, paid the full price for their orders, including VAT, which the suspects kept for themselves. They thus retained a much higher margin. The European Public Prosecutor’s Office says it was alerted by the Belgian customs administration and by an investigation by the European Anti-Fraud Office.
Jonathan Holslag, professor at the VUB university of Brussels, also warned of massive fraud at Liege Airport in a report published earlier this year. The airport is mainly used as a European logistics hub by Alibaba, which imports huge quantities of e-commerce packages there. For understaffed customs officials, checking all deliveries is an almost impossible task.
Alibaba’s logistics branch Cainiao stresses that it is not involved in the investigation. “Cainiao has constructed and operated the Liege eHub in strict compliance with Belgian local, regional and federal laws and regulations and actively cooperates with local authorities to facilitate the performance of controls and checks throughout the logistics process, including the customs.”