TRADERS PLUCK VAT BY FICTICIOUS EXPORT OF MEDICINES
Dr. Antonia Purvanova, MP from NMSII, to the BANKER weeklyDr. Purvanova, manufacturers complain that wholesalers of medicines are plucking Value Added Tax (VAT) by fictitious export. Is that true?- Regretfully, yes. For three months now producers and directors of hospitals have been continuously informing the Parliamentary Health Care Commission about such frauds.The inofficial check among the electorate, made by MPs during their journeys round the country, has shown that some wholesalers are selling the medicines at much lower prices than they have purchased them from the manufacturer, VAT included. Afterwards, they offer the medicines to the hospitals at advantageous prices, ousting perfect distributors from the market and dooming them to bankruptcy.We've come across cases when a medicine, bought from the producer at BGN1.20 (including BGN0.20VAT), has been sold to several university hospitals in the country at BGN1.06. As a result, the wholesaler does not at all lose money. On the contrary, he gains BGN0.14 per piece, because he has filed at the customs documents for export and has therefore been refunded the paid VAT. Thus, he gains a monopoly by ousting the scrupulous dealers from the market. Afterwards the hospitals become indebted to him as their directors order huge quantities, aiming to ensure medicines at advantageous prices. Thus, health establishments have accrued overdues totalling BGN40MN.What is the amount of the plucked sum?- BGN10MN since the beginning of 2002. A more precise inspection, however, could establish a much higher amount. The documents of some companies show that they have exported a larger quantity than the manufacturer's output.Can you mention a specific company?- No, because Parliament, the Finance Ministry and the customs will soon launch measures against these wholesalers. An expert panel of representatives from these three institutions will be set up next week in order to work out urgent measures for intersecting the frauds concerning VAT. We may also order an inspection of some university hospitals by the National Audit Office becasue of debts, accrued as a result of other games.What games do you have in mind?- We have established that some directors of health care establishments close contracts with certain wholesalers of medicines without inviting tenders in compliance with the Public Procurement Act. They do not take into consideration the price, which is always higher than normally in such cases and obviously defrauds the revenue. The Varna University Hospital, for example, has purchased a very rarely used anaesthetic. One hundred ampullas have been bought at the price of BGN250,000. Bearing in mind the fact that no more than four ampullas per year are normally used, it is more than evident that part of the money paid for such a medicine (with a term of expiry) goes to someone's pocket. In the Parliamentary Health Care Commission we are adamant that such practices should be intersected. Time and again I have been repeating to the Minister of Health Care Bozhidar Finkov that we should not only be asking for money, but a good management in the sector is necessary. And this is not done. Reforms in the sphere of medical aid even stopped a year ago and control is extremely inadequate. Therefore, nobody should be angry if fined.