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2021.05.27 17:06

‘Pinnacle of cynicism’ – Lithuanian firms spend pandemic subsidies on luxury cars

LRT.lt, BNS2021.05.27 17:06

Nearly 150 firms in Lithuania used government subsidies, aimed at keeping businesses afloat during the pandemic, to purchase luxury cars.

Lithuania's Tax Inspectorate (VMI) has data that 148 business firms that claimed coronavirus subsidies in 2020–2021, subsequently purchased luxury cars valued at over 50,000 euros, said MP Mykolas Majauskas, chair of the parliamentary Budget and Finance Committee, on Thursday.

Read more: Expensive cars spark discussions of luxury tax in Lithuania

“Thirty-two of them bought Bentley, Maserati, Porsche, Lamborghini, Rolls Royce cars,” he told reporters.

While he did not give away the names of the firms, Majauskas cited a case where a company was included into the list of businesses affected by the pandemic, used the option to defer taxes, claimed subsidies to pay furloughed employees, received additional taxpayer support and purchased a Range Rover SUV worth over 100,000 euros.

“They then registered the car as a freight vehicle, presumably to claim VAT refunds, and applied for government support to cover leasing payments. They were given the support,” Majauskas said, adding that taxpayers will cover 95 percent of interest on the SUV loan.

“Some call this business, but to my mind, that is the pinnacle of cynicism. And it's not a unique case,” he said.

In another case, a firm which claimed to be in financial stress, and received government support, purchased a Porsche Cayenne car for over 100,000 euros.

“It is high time that the tax authorities introduce principled oversight and come to the door of every firm that used taxpayer support to buy luxury sports cars,” Majauskas said.

LRT.lt has seen the list of the firms flagged by the VMI. Four out of five companies that received the biggest subsidies to cover furlough pay have purchased Porsche cars, the document shows.

Commenting on the revelations, Prime Minister Ingrida Šimonytė later said that similar abuses had been prevalent even before the pandemic.

“It's no secret that some businesspeople in Lithuania declare their personal consumption as business expense [in order to claim tax refunds],” she told reporters.

In some “curious cases”, firms declare luxury cars as freight vehicles, she said, adding that tax authorities should look into it.

Finance Minister Gintarė Skaistė told members of parliament on Thursday that the government had tightened criteria when businesses can apply for pandemic subsidies.

“We are trying to make the support as targeted as possible, but warding off fraudsters can be complicated,” she said.

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