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French Report On EU Tax Evasion

by Ulrika Lomas, Tax-News.com, Brussels

15 October 2013


Figures published in a French report, presented recently to the National Assembly Foreign Affairs Committee, reveal the full extent of the problem of tax evasion both at national and European Union level.

According to deputies Alain Bocquet and Nicolas Dupont-Aignan, tax evasion leads to an annual revenue shortfall for France estimated at between EUR60bn (USD81.4bn) and EUR80bn. This figure compares to the EUR53bn in total income anticipated from corporation tax (IS) this year.

The report claims improbably that revenue losses arising from tax evasion at European Union (EU) level are around EUR2,000bn annually, twice the European Parliament's previous estimate of EUR1,000bn, mooted at the beginning of the year.

Value-added tax (VAT) fraud is of particular concern. Indeed, the VAT shortfall or so-called "VAT gap" is said to amount to approximately EUR193bn a year, corresponding to 1.5 percent of European gross domestic product (GDP). Italy and France suffer the highest annual VAT losses from tax evasion and fraud, amounting to EUR36.1bn and EUR32.2bn respectively.

In conclusion, rapporteurs Bocquet and Dupont-Aignan underline the need for France to implement tougher measures aimed at combating tax evasion, notably by bestowing greater investigative powers and competencies to the country's Tax Administration and by demanding more information and increased transparency from both corporations and from banks in France.

While conceding that lawmakers in France have already taken the first strides to address the issue, by waving through bank legislation to separate and regulate banking activities and by backing the Government's anti-tax fraud bill, the French deputies nevertheless warn that it is now time to up the ante. This will enable the Government to recoup vital lost revenues, to restore confidence, and to significantly reduce the tax burden in return, they maintain.

TAGS: compliance | Foreign Account Tax Compliance Act (FATCA) | tax | value added tax (VAT) | tax compliance | tax avoidance | FATCA | law | banking | corporation tax | legislation | France | Germany | Italy | United States | European Union (EU) | Compliance | Europe | Tax | Tax Evasion

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