European Finance Ministers reached an agreement in principle at this month's ECOFIN meeting to strengthen the legislative response to value-added tax (VAT) fraud by adopting a new directive and regulations.
The proposals are centred on new mechanisms to facilitate the effective exchange of information across borders more quickly to enable the rapid detection of fraud, in particular missing trader fraud, also known as 'carousel' fraud. The directive and regulation will be adopted at a forthcoming European Council (ECOFIN) meeting, once the European Parliament has delivered its opinion.
The proposals provide for a reduction in the statutory time limits imposed on operators for the declaration of transactions for VAT purposes, together with a reduction in the time limits for transmission of such information between member states, while avoiding any increase in the administrative burden on undertakings.
According to a report adopted recently by the European Parliament, member states are deprived of about EUR200-250bn a year as a result of fiscal fraud. VAT fraud alone accounts for some EUR40bn a year, equal to 10% of the total receipts.
At the previous ECOFIN meeting in October, ministers approved proposed guidelines for an EU-wide system to combat VAT fraud, to be called 'Eurofisc,' a decentralised network for the exchange of information on VAT fraud between the member states.
However, member states once again failed to agree on reduced rates of VAT on labour intensive and locally-provided services, and ministers are now not expected to take a decision on the matter until the end of next year pending further study by the European Council.
In other tax related matters, the Council agreed to the drafting of a new directive adapting excise duty arrangements in the EU and permitting the introduction of a computerised excise duty monitoring system. The computerised excise duty monitoring system is intended to provide a simpler, paperless environment for business.
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