Abstract

http://ssrn.com/abstract=2309426
 


 



American VAT – The Carousel Fraud Threat: Will the EU Show the US the 'Way Forward'


Richard Thompson Ainsworth


Boston University - School of Law; NYU - Graduate Tax Program

August 13, 2013

Boston Univ. School of Law, Law and Economics Research Paper No. 13-37

Abstract:     
On Thursday, March 29, 2007 the European Commission, Directorate-General for Taxation and Customs Union, will host a one-day Conference on Fiscal Fraud – Tackling VAT Fraud: Possible Ways Forward. The conference is based on the Communication of May 31, 2006 explaining the need to develop a coordinated strategy to improve the fight against fiscal fraud. This paper indicates that the EU examination of carousel fraud points the way forward for advocates of a US VAT as well.

About 40% of EU VAT fraud appears to be 'missing trader intra-community' (MTIC) or carousel fraud. The best estimates of EU losses to carousel fraud are put at 23 billion euros annually. UK studies put domestic losses from carousel fraud at 2.98 to 4.47 billion euros.

Fraud concerns understandably resonate deeply among American advocates of a federal level VAT in the US. It needs to be taken into consideration that inserting a national credit-invoice VAT into the US fiscal fabric would be to set out the welcome mat for an American carousel fraud, as well as the more traditional VAT frauds. The vulnerability of a US VAT to carousel fraud is a direct result of the American tendency for national, state and local tax systems to 'piggy backing' on one another is taken into account.

Number of Pages in PDF File: 6

Keywords: VAT, MTIC, carousel fraud, American VAT, piggy-back

JEL Classification: H26, H29, K34

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Date posted: August 13, 2013  

Suggested Citation

Ainsworth, Richard Thompson, American VAT – The Carousel Fraud Threat: Will the EU Show the US the 'Way Forward' (August 13, 2013). Boston Univ. School of Law, Law and Economics Research Paper No. 13-37. Available at SSRN: http://ssrn.com/abstract=2309426 or http://dx.doi.org/10.2139/ssrn.2309426

Contact Information

Richard Thompson Ainsworth (Contact Author)
Boston University - School of Law ( email )
765 Commonwealth Avenue
Boston, MA 02215
United States
NYU - Graduate Tax Program ( email )
Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States
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