"UFF should pay taxes in Sweden"

Dagens Nyheter/December 3, 2002
By Juan Flores and Nuri Kino

The UFF units run a commercial business which doesn't primarily have a non-profit purpose. Therefore they shouldn't be tax-exempt, says a source who until recently has been responsible for parts of UFF's finances.

Swedish UFF has been tax-exempt over the years and hasn't payed either profit taxes or VAT. Organizations registered as non-profit associations don't have to do that.

DN's source, who has had direct insight into the operation, claims, however, that the clothes' collection has been a false front, and that means in different ways have been transferred to the organizations of the Teachers Group - through fake invoices, contractors' fees, salaries, high administration costs and prearranged price levels of the clothes sales. It is the financial draining of UFF which has caused the collection operation to become insolvent, the UFF source tells us. --The organization could easily get a surplus of 50 millions SEK to use for aid purposes - and still pay taxes, he says.

The tax authorities have not carried out any audit of UFF apart from the "desktop audit" they make when an organization is formed.

Since 1998 the authorities has the right to demand taxes for five years to be payed retroactively, depending on circumstances, if an organization has been tax-exempt based on incorrect assumptions. Furthermore, board members can be held personally liable for payment if the organization isn't able to pay the taxes. --In order for an organization to be tax-exempt, at least 80 percent of the surplus has to be used for the non-profit purpose. If that money is used mainly to pay high salaries it could be a circumstance leading to a revocation of the tax-exemption, says Per Johansson, regional specialist at the tax office.

The salary issue is crucial to UFF, since that is the way a major part of the money is being transferred to the Teachers Group. The aid money is mostly used for paying the people running the projects. Only members of the Teachers Group can be project leaders. All members of the Teachers Group signs contracts to the effect that they give away their salary to the management of the Teachers Group and get pocket money in return. In that way the major part of the aid money finds its way directly back to the Teachers Group. Several countries presently investigate Humana organizations for suspected tax evation.

Danish UFF has been included in the preliminary investigation of the Teachers Group leader Amdi Petersen and some of his accomplices. They are being prosecuted for serious tax fraud in connection with payments from a tax-exempt charity fund. The police suspect that Danish UFF too has abused its tax-exempt.

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