Richard Cornelisse

Fighting Fraud: MEPs Want Accurate Information On Customs Duty And VAT Evasion

In Macroeconomic effects of VAT, Tax News on 17/05/2012 at 12:40 pm

MEPs Definition

The European Parliament is made up of 754 Members elected in the 27 Member States of the enlarged European Union. Since 1979 MEPs have been elected by direct universal suffrage for a five-year period.

European Parliament – Press Release May 10, 2012

The reporting of fraud and corruption in Member States’ spending of EU funds and collection of customs duties and VAT – the traditional sources of the EU budget – must be improved, so as to protect the EU’s financial interests and prevent misuse of its funds, says Parliament in a resolution voted on Thursday.

The resolution, by Zigmantas Balčytis (S&D, LT), calls on the European Commission to act to remedy the lack of information on VAT and customs duty evasion in Member States and the misuse of EU funds by organised crime.

Every Euro Should Be Well Spent

“It is in the interest of EU citizens that every euro of EU money should be spent properly. For decades, the EU Anti-Fraud Office (OLAF) was unable to recover misused money from the Member States or even to provide accurate data on the scale of fraud and corruption related to EU funds. We want the Commission to establish a proper system to collect all relevant data, so that we have a full picture of the existing problems, allowing us to fight fraud more effectively and better protect the financial interests of the Union as a whole”, said Mr Balčytis.

Recover Irregular Payments

MEPs deplore the fact that large amounts of EU funds are still spent wrongly and urge the Commission to step up its efforts to recover irregular payments. They feel that Member States should made to account for misused funds that have yet to be paid back and should make more effort to prevent and detect irregularities and fraud.

If funds are misused, payments should be suspended immediately and effective sanctions imposed, says the text.

Who Pays The Cost Of VAT Evasion?

MEPs highlight an “alarming VAT gap” in some Member States – i.e. the difference between the amount of VAT a country should theoretically collect, given the size of its economy, and its actual VAT receipts.

In some countries, the VAT gap is almost 30%, whereas the EU average is 12%. MEPs fear that the missing money is mostly made up from the proceeds of austerity measures imposed on those EU citizens whose income is easily traceable

Customs Duties

Parliament also wants more data on the evasion of customs duties. These are a traditional source of “own resources” for the EU budget and hence directly affect the national contributions paid into it.

MEPs are especially concerned about smuggling of cigarettes and alcohol and therefore welcome an action plan drawn up by the Commission to fight smuggling on the EU’s eastern border and the renewed customs cooperation deals with China and Russia.

Executive Summary

The European Parliament has recently passed a resolution calling for accurate information on customs duty and value-added tax (VAT) evasion in member states, to protect the European Union’s (EU) financial interests and to prevent misuse of its funds.

The resolution calls on the European Commission to act to remedy the lack of information on VAT and customs duty evasion in member states and the misuse of EU funds by organized crime, arguing that for decades, the EU Anti-Fraud Office (OLAF) was unable to recover misused money from member states or even to provide accurate data on the scale of fraud and corruption related to EU funds.

Backing the resolution, MEPs highlighted an “alarming VAT gap” in some member states, namely the difference between the amount of VAT a country should theoretically collect, given the size of its economy, and its actual VAT receipts.

In some countries, the VAT gap is almost 30%, whereas the EU average is 12%. MEPs alluded to their concerns that the missing money is mostly made up from the proceeds of austerity measures imposed on those EU citizens whose income is easily traceable.

The European Parliament also wants more data on the evasion of customs duties, a traditional source of “own resources” for the EU budget and which therefore directly affects the national contributions paid into it.

EP Demands Accurate Information On Tax Evasion by Ulrika Lomas, Tax-News.com, Brussels

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Indirect Tax Function Effectiveness and the chapters:

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