EU crackdown on 60 billion euro VAT fraud

31st May 2006, Comments 0 comments

31 May 2006, BRUSSELS - The European Commission on Wednesday called for a coordinated European Union-wide crackdown on fraud in value-added taxes (VAT).

31 May 2006

BRUSSELS - The European Commission on Wednesday called for a coordinated European Union-wide crackdown on fraud in value-added taxes (VAT).

Officials said such fraud could be worth 60 billion euros ($77 billion), or 10 percent of all transactions.

EU taxation commissioner Laszlo Kovacs said he wanted to spark debate "on an overall anti-fraud strategy at EU level," in addition to measures taken by national governments.

Cross-border trading in the EU is curently exempt from tax, with VAT being paid only in the country where the final sale of goods takes place.

Fraud often involves importers buying tax-free goods from another EU state, then selling them with VAT added but without passing on the money to national authorities.

The commission is suggesting that governments consider the adoption a "drastic" reform which would see VAT charged and paid up front, at the beginning of the supply chain.

The tax authority of the first country would then be responsible for passing on the VAT funds to the country where the goods are being transferred.

Of several reform options being considered by the commission, EU officials this is "the most innovative" and the most difficult to achieve because it would need unanimous agreement.

"Tax fraud has become a major cause for concern," said Kovacs.

Germany recently estimated the overall losses in VAT receipts at 17 billion euros annually.

EU governments estimated in 1998 that for alcohol alone, VAT fraud amounted up to 1.5 billion euros yearly, approximately 8 percent of total excise duties receipts on alcoholic beverages.

DPA

Subject: German News

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