Tackling tax fraud: European Commission proposes stronger cooperation with non-EU countries on VAT | WPN World People News

As part of the intensified battle against tax fraud, the Commission launched the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU's neighbours and trading partners would improve Member States' chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

Algirdas Šemeta, Commissioner for Taxation, said: "The supply chain has evolved dramatically since VAT was first implemented in the EU. Globalisation and e-commerce open up new windows of opportunity, but also create new risks. Fraudsters play on cross-border differences and information gaps between countries. The EU needs to work hand-in-hand with its international partners if it is to successfully combat VAT fraud. That is what the Commission is proposing, with a request for negotiating mandates to formalise this cooperation."

The cooperation agreement would be based on the Regulation on administrative cooperation in the field of VAT, which currently sets the framework for intra-EU collaboration in this area. Among the ways in which Member States cooperate against VAT fraud are by allowing each other access to their data bases, and exchanging information (either automatically or on request) on taxpayers' activities. Eurofisc is also a very effective network for Member States to exchange information and intelligence on VAT fraud.

The use of such instruments could be extended to third countries through cooperation agreements against VAT fraud. The EU intends to negotiate such agreements with neighbouring countries, its main commercial partners and countries to be considered leaders in the field of electronically supplied services. For now, exploratory talks have been initiated with Norway, Russia, Canada, Turkey and China. Both Norway and Russia have already indicated that they are now ready to start official negotiations.

Source: European Commission