By highlighting widespread abuses that might otherwise remain undetected, whistleblowers can drive legal and systemic changes that benefit all of society. In Palestine, Transparency International’s ALAC received an anonymous report from a business owner exposing widespread use of accounting programmes that enable tax evasion. The ALAC investigation found that the programmes allow companies to create fictitious accounting groups with inaccurate average sales volumes that are lower than actual sales volumes. The companies submit the financial reports of the fictitious groups to the Ministry of Finance to pay less value-added tax (VAT), hiding their real sales figures via invisible paths in the accounting programmes that can only be accessed internally. As VAT provides the largest tax contribution to the state treasury, the scheme has resulted in serious revenue losses for the Palestinian people during the 15 years that companies have used the software.
To end the losses, Transparency International Palestine wrote to the Minister of Finance informing them of the fraud, copying the country’s Anti-Corruption Commission. In response, the commission informed ALAC staff that it had made recommendations to the Ministry of Finance to tackle tax evasion, in particular VAT fraud. These include specifying the accounting programmes companies must use to submit sales information, and enhanced auditing processes. The ministry is reviewing the measures in preparation for their adoption. Thanks to one businessperson speaking up against widespread wrongdoing, the Palestinian treasury stands to gain revenue that is vital for funding much-needed public services.
Source: Transparency International https://www.transparency.org/en/blog/whistleblower-stories-individuals-safeguarded-public-interest-exposing-misconduct?utm_source=newsletter&utm_medium=email&utm_campaign=weekly-17-01-2025
