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Former tax authority employee András Horváth has accused NAV of shutting its eyes to irregularities discovered during audits of many national and multinational companies.

According to Horváth, the Hungarian state has lost at least HUF 1,000 billion in tax income and NAV knows all about it. His claims have been given credence because he was responsible for the coordination of tax collection at NAV, before resigning.

Horváth has told news portal index.hu that in his position he came across many cases of value-added tax evasion over the tolerance limit. However, his managers at NAV had not reacted much or at all when he informed them. In fact, he said, he had been promptly removed from cases that should have required deeper review. This was why he had resigned and gone public.

NAV has denied Horváth’s allegations and accuses him of abusing his position. The Ministry of National Economics said it had conducted an investigation at the tax authority and found nothing serious.

Horváth told index.hu that NAV negotiated every year with some major taxpayers on the amount that they must pay, and then they would not pay one forint more. He said the tax evasion tolerated by NAV in this way brings about a loss of HUF 1,000 billion to the state budget each year.

Worse, he alleges, several hundred NAV employees know what is going on, including many senior employees. Horváth said the tax evasion is most widespread in the food industry, where almost all products are subject to VAT.

A new news portal, VS.hu, says NAV conducted a big investigation last year under the pseudonym Border SK to shed light on tax evasion by big retail chains. The startling results had been published in the NAV newspaper “Pénzügyőr”. According to VS.hu, many NAV employees must have been involved in tax evasion on such a big scale.

At the Slovakian border alone, VS.hu said, 25% of imports that landed at national and international retailers in Hungary were not cleared. The allegation has been denied by the big retailers, which said they paid their full taxes.

Investigations requested

The accusations should be investigated as part of a criminal procedure, ruling Fidesz parliamentary group leader Antal Rogán told news website index.hu on Wednesday.

Rogán’s comment came in response to Horváth’s allegation that two years ago he had warned both him and the Economy Ministry of large-scale VAT fraud but they had turned a deaf ear to his warning.

Rogán said it should be investigated if it is a false accusation or the former tax inspector is right. But this is an affair to be dealt with by the prosecutor’s office, he said.

The opposition E-14-PM electoral alliance said it turned to the economy minister concerning the issue and requested that the head of the state auditor (ÁSZ) mount a special investigation. It will also move to convene a hearing of Horváth by the relevant parliamentary committee, the alliance said in a statement.

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