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Organised VAT fraud: features, magnitude, policy perspectives

Fabrizio Borselli

No 106, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

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 (search for similar items in EconPapers)
JEL-codes: H21 H26 K34 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-acc, nep-eec and nep-iue
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