More funding to modernize customs and tax authorities but EU VAT fraud still rampant

Monday, 11 June 2018 20:36
The European Commission announced last week an increase in funding in next long-term EU budget (2021 -2027) for cooperation between tax and customs authorities in EU member states. The programmes aim at modernizing national administrations and will not directly tackle customs and tax fraud.
The Commission is proposing a financial commitment of €950 million for the EU's customs programme and €270 million for the Tax (Fiscalis) programme, representing 0.07% and 0.02% of the next EU budget respectively.

Measures in both programmes will focus on increasing information and data exchange, devising risk management strategies, sharing good practices, and putting in place joint audits.

The new custom measures coincide with the celebration of the 50th anniversary in 2018 of the Customs Union, the backbone of the EU single market. The EU´s tax programme was first designed in 1993.

Both programmes have contributed to a more efficient collection of customs duties and taxes, but the Commission admits that the new proposals come at a time where public sentiment against tax avoidance runs high, with EU governments needing to recoup more than €50 billion a year lost to value added tax (VAT) fraud.

Asked at the press briefing (8 June) about the possible impact of the measures on EU’s revenues, Olivier Bailly, head of cabinet of Commissioner Moscovici, replied that the measures are limited and targeted to supporting and modernizing the national administrations.

“Member states aren’t doing enough to fight VAT fraud,” he said and called for an EU solution of the problem. EU’s revenues (“own resources”) are among others based on a uniform rate on the harmonised VAT base in the member states. The Commission proposed last May a reform of the EU VAT system.

OLAF, the European anti-fraud office, writes in its latest annual report that its investigators have been faced with increasingly complex customs fraud cases – mostly undervaluation fraud – perpetrated by highly organised international criminal gangs. The single most significant hub for this type of fraud was in the UK.

Bailly told The Brussels Times that the new proposals include exchanges of best practices and experts among member states.

The Brussels Times
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