Organised VAT Fraud: Features, Magnitude, Policy Perspectives

45 Pages Posted: 15 Mar 2012

Multiple version iconThere are 2 versions of this paper

Date Written: October 12, 2011

Abstract

The European Union’s VAT system has become vulnerable to organised fraud schemes. In recent years, these schemes, undergoing a change in structure, have affected services and imports of goods from third countries and may also have shifted trade in goods among EU countries. Within the EU-27, organised VAT fraud is estimated to amount to between €20 billion and €35 billion a year. The EU institutions and Member States have put forward several measures to tackle this problem, although some of these have placed a disproportionate burden on businesses. The article shows that need to maximise the effectiveness of anti-VAT-fraud strategy cannot be separated from a broad view of the problem and of the functioning of the VAT system as a whole. A drastic change in the VAT system might provide a robust defence against fraud but produce uncertain effects. Enhancing risk management and exchange of good practices is essential. Technology-based solutions appear to be a pragmatic and politically feasible approach to new challenges, with good prospects of success.

Keywords: VAT, tax evasion, fraud

JEL Classification: H21, H26, K34

Suggested Citation

Borselli, Fabrizio, Organised VAT Fraud: Features, Magnitude, Policy Perspectives (October 12, 2011). Bank of Italy Occasional Paper No. 106. Available at SSRN: https://ssrn.com/abstract=2023080 or http://dx.doi.org/10.2139/ssrn.2023080

Fabrizio Borselli (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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