EC Plans Online Solution For Tax Fraud

by Ulrika Lomas, Tax-News.com, Brussels

09 January 2002

The European Commission has proposed a computerised system to combat alcohol and tobacco tax evasion, it revealed recently.

Under the existing system, products such as alcohol, tobacco and mineral oils are transported between traders in bond under duty suspension arrangements. This means that the duty is chargeable only when the goods are actually released for consumption.

However, goods moving under suspension must be accompanied by significant documentation of the movement of the goods and the traders involved in the transaction, and traders are required to lodge a guarantee to cover the risk inherent in moving untaxed goods.

According to the EC, the proposed online system would replace the accompanying paperwork with a computer messaging system, which would link the traders via their national tax administrations.

Experts believe that although the cost to the European Union of implementing the system is likely to be reasonably high, the scheme will prove popular with traders. 'The current paper-based system is unable to cope with increasing levels of tax evasion and is unpopular with traders, who find it cumbersome,' an EC spokesman explained.

'We need a computerised system to record movements of exciseable products if we are to get to grips with fraud and tax evasion,' the Commissioner responsible for taxation, Frits Bolkestein, confirmed.

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