Fair Taxation: Commission proposes new tools to combat VAT fraud
The European Commission has today unveiled new tools to make the EU’s Value Added Tax (VAT) system more fraud-proof and close loopholes which can lead to large-scale VAT fraud. The new rules aim to build trust between Member States so that they can exchange more information and boost cooperation between national tax authorities and law enforcement authorities. The most cautious estimates show that VAT fraud can lead to lost revenues of over €50 billion a year for EU Member States – money that should be going towards public investment in hospitals, schools and roads. Revelations in the ‘Paradise Papers’ have again shown how tax avoidance schemes can be used to help wealthy individuals and companies to circumvent the EU’s VAT rules to avoid paying their fair share of tax. Recent reports also suggest that VAT fraud schemes can be used to finance criminal organisations, including terrorists. Today’s proposals would enable Member States to exchange more relevant information and to cooperate more closely in the fight against these activities. Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, said: “Cross-border VAT fraud is a major cause of revenue loss for Member States and EU budgets. Today’s proposal will help to strengthen the cooperation between institutions working nationally and at EU level in order to effectively tackle this problem and improve tax collection.“Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The Paradise Papers have again shown how some are taking advantage of lax application of EU VAT rules to get away with paying less VAT than others. And we know that VAT fraud can be a source of financing for criminal acts, including terrorism. Combating this requires far more effective information-sharing than currently exists between the competent national authorities – and today’s proposals will make that happen.” A full press release and MEMOcan be found online.