The European Parliament has backed proposals by the Commission to introduce new laws to tackle VAT fraud in the EU. Such fraud is estimated to cost €100bn in lost revenue annually. The Commission has proposed the establishment of a Quick Reaction Mechanism which allows EU governments to combat large-scale fraud.
During the debate, it was highlighted that common rules on tackling VAT fraud, did not mean the introduction of a "new level of European taxation", but a simplified system of VAT which would become less susceptible to fraud. The complexity that exists between Member States, is leading to loopholes and grey areas that are being targeted by fraudsters.
This Legislative Resolution has introduced amendments to the new Directive which is set to repeal Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. This included the adoption of a report by Maltese MEP David Casa, a report which proposed a “common system of value added tax as regards a quick reaction mechanism against VAT fraud.”
The changes will introduce efficiency in the present system, which has been criticised as faulty since it has been providing many opportunities for fraud. The EU Parliament is currently preparing an additional report so as to introduce more tools to efficiently deal with tax fraud and tax evasion. This report is expected to further enhance EU coordination in this field.
