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Friday, 29.03.2024, 08:40
Combating VAT fraud: new EU’s efforts to assist member states
The common Value
Added Tax (VAT) system plays an important role in Europe's Single
Market. It is a major and growing source of revenue for all EU states, raising
over €1 trillion in 2015, corresponding to 7% of EU GDP. Besides, one of the
EU's own resources in the EU budget is also based on VAT; as a consumption tax,
it is one of the most growth-friendly forms of taxation.
Fraud in VAT: huge hole in budgets
Recent
investigations once again exposed huge costs of VAT fraud in public finances,
with criminal gangs profiting at the expense of honest taxpayers. The
Commission has consistently pressed for the reform of the VAT system to make it
more fraud proof. Progress has been made with new rules agreed on VAT for
online sales and more efficient rules for the exchange of information and
cooperation between Member States. A fundamental overhaul of the current system
was proposed in October 2017. However, progress has been slow on the
Commission's proposals to put in place a business-friendly and more fraud-proof
definitive EU VAT area.
The new Transaction Network Analysis, TNA is part of the Commission's effort to put in place a modern and fraud-proof VAT system. Fraudulent VAT’s eradication should be a top priority for the EU-states’ governments. Commissioner for Economic and Financial Affairs, Taxation and Customs, underlined that criminal VAT fraud was one of the major issues facing presently states’ public finances. The new tool will increase the speed at which authorities can uncover and act on suspicious activity.
However, he added, the new TNA would not lessen the need for deeper and
more fundamental reform of the EU and the states' VAT system: it should cope
with the vast amounts of trade taking place across EU borders.
Coordinating cross-border investigations
Using
modern digital appliances, VAT fraud can take place in the blink of an eye,
making it even more important that the states have tools to allow them to act
as quickly and efficiently as possible. The TNA, which the EU states will start
using, will allow tax authorities fast and easy access to cross-border
transaction information, leading to quick action when potential VAT fraud is
flagged.
The TNA has
been developed through close collaboration between the states and the
Commission; will also allow much closer cooperation between the EU's network of
anti-fraud experts (so-called, Eurofisc) when it comes to jointly analysing
information so that VAT carousel fraud can be detected and intercepted as fast
and effectively as possible. It will boost cooperation and information exchange
between national tax officials, allowing Eurofisc officials to cross-check
information with criminal records, databases and information held by Europol
and OLAF, the EU's anti-fraud agency, and to coordinate cross-border
investigations.
Anti-fraud
officials from the EU states participating in the TNA agreed on how the tool
will function and how the information collected will be used in future.
Source: Commission press release, in:
http://europa.eu/rapid/press-release_IP-19-2468_en.htm?locale=en/ Brussels,
15.05.2019