TALLINN — Estonia’s Tax and Customs Board is attacking the country’s gray market, widespread throughout the Baltic states, by cracking down on tax delinquents.

The state missed out 566 million krooni (€36.1 million) through undeclared and unpaid taxes, Estonian Tax and Customs Board reported Friday and of those cases 89 percent were conducting illegal business practices. The board said the business were primarily in the retail fuel, construction, scrap metal and forestry sectors and that the primary method of hiding sales and earnings was utilizing fictive accounts, hidden salaries and not reporting value-added tax.

Egon Veermäe, director of control department at the Tax and Customs Board said that tax-avoidance in scrap metal and retail fuel were largely in imports from Latvia to Estonia.

“On that kind of deals it is usual that the sales between the Latvian company and the Estonian buyer are formed through a shadow company registered in Estonia with an intent to skip out the taxes,” Veermäe said in a statement to the press.

A full 73 percent of the tax violations are VAT-related, the board reported. The biggest problem among entrepreneurs is using fictive accounts.

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