Operation 'Iroko'

• The searches that are being carried out throughout today represent the beginning of inspections of 119 companies and 38 related individuals.
• Previous investigations have made it possible to detect accounting manipulations of stocks that would facilitate the declaration of discrete profits and serve to conceal the concealment of sales.
• The device deployed in the fifteen CCAA of the common territory has the participation of more than 520 officials of the Tax Agency

March 14, 2019.- The Tax Agency has launched a major nationwide operation against tax fraud in the furniture manufacturing and marketing sector. The operation, called 'Iroko', involves the start of inspections on a total of 119 companies and 38 individuals who are partners and directors of the companies under investigation, starting with the entry and search of 112 premises located in the fifteen Autonomous Communities of the common territory.

The device deployed by the Agency affects premises of both furniture manufacturers and wholesalers and retailers in the sector located in: Andalusia (34), Aragon (6), Asturias (3), Balearic Islands (1), Canary Islands (6), Cantabria (1), Castilla-La Mancha (1), Castilla y León (5), Catalonia (20), Extremadura (2), Galicia (5), La Rioja (1), Madrid (6), Murcia (5) and Valencian Community (16). The actions have been initiated at the opening time of the premises by the appearance of the Tax Inspection and its Computer Audit Units (UAI) in the premises of the investigated companies, in order to directly access the real accounting or auxiliary documentation and information, including the computer systems for processing information.

The experience of previous operations shows that the presence of the Administration in the premises or homes where economic activity is carried out and where the business is managed allows for a more effective fight against the underground economy. As this is an administrative procedure, entry and search procedures do not involve arrests.

Previous research

Since 2013, the furniture sector has enjoyed five consecutive years of growth, linked to the rise of the real estate market. In 2017, the sector generated a turnover of over 4.3 billion euros and all manufacturing subsectors increased their turnover.

In this context, the Tax and Financial Inspection Department of the Tax Agency carried out a global analysis of the furniture sector, cross-referencing information and analysing companies engaged in both manufacturing and wholesale and retail marketing.

The study included an analysis of corporate tax returns on gross sales margins, net margins, margin on supplies, cash movements (mainly in bank accounts owned by the companies) and card payments, as well as other indications of financial capacity observed in directors, authorized account holders or partners.

Inventory irregularities

In addition, previous inspections in the furniture sector, both at the level of manufacturers and in relation to wholesale and retail trade, had revealed certain distortions in the evolution of sales and stocks that indicated the making of undeclared sales.

Based on this analysis and prior experience, the Agency's investigators observed that certain companies manipulated their accounting records in order to declare a discrete level of profits and thus conceal the concealment of sales. At the same time, there were indications that the group affected by the operation launched today could be using concealment software that would allow them to manipulate both stocks and actual sales.

All of this has contributed to the design of the 'Iroko' operation, which has been coordinated by the Inspection Department of the Tax Agency, with the participation of more than 400 officials from the Inspection Area in the entry and registration operation, including staff from the UAI and the National Fraud Investigation Office, as well as the support of police officers and 120 Customs Surveillance officials from the Agency.

Towards an improvement in voluntary compliance

In addition to the regularisation of tax fraud that eventually comes to light, this and all the sector-specific actions carried out in recent years by the Tax Agency have a second objective consisting of transmitting a dissuasive message to the corresponding sector, trying to favour a change in the attitude of businessmen, so that they redirect their activities and improve their subsequent tax compliance in the voluntary payment period, in line with the general guidelines of the Annual Tax and Customs Control Plan of 2019. The evolution of future tax control plans, which will focus especially on the following, will depend on these changes in the attitudes of specific entrepreneurs: