Germany probes mobile phone tax fraud scheme

FRANKFURT: German authorities have raided 150 offices and residences across the country in an investigation of an organised tax fraud scheme in the mobile phone market.

Frankfurt prosecutors said in a statement on Wednesday that officials were investigating 23 people and had arrested four suspects.

The scheme, dubbed the sales tax carousel, had caused damages of at least 13 million euros ($18.8 million), of which 3 million had been recovered by authorities, prosecutors said.

The suspects are accused of buying millions of mobile phones, in particular the popular iPhone 4, abroad without paying sales tax (VAT) in Germany, prosecutors said.

Through a number of companies the devices would then be resold outside of Germany to reclaim the sales tax, never paid to begin with, from German tax authorities.

A spokesman for the prosecutor's office said not all of the companies involved were known, and some were merely shell companies.

In a similar scheme, tax fraud on carbon emissions trading cost the German government an estimated 850 million euros in damages.