‍VAT+fraud‍

VAT fraud is when companies and people don’t pay their value added tax (VAT). Advocates for VAT taxes say it i s the best ever invented and that it is particularly effective way of raising tax revenue. However advocates have also long recognized that VAT taxes are also vulnerable to evasion and fraud. During the last years especially the European Union have a marked increased concern with the losses from VAT fraud the EU. Carousel fraud caused the biggest loss of VAT taxes. VAT fraud is usually divided into two broad categories. The first one, various techniques of conventional tax evasion, implies hiding of taxable receipts from the sales of products and services. It id done by either not recording them in the book or recording them but at a lower price or lower quantities. The second is the Carousel fraud which is in the next part.

**Carousel fraud **
Carousel fraud or missing trader fraud is the most frequent VAT fraud; Great Britain is the main target in Europe. Through carousel fraud or community value-added tax fraud, fraudsters import good VAT-free from other countries and then sell it to domestic buyers charging them VAT taxes. Then when it is time to pay the tax to the government the sellers have disappeared.

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 To be able to fight the evasion of VAT taxes a tougher stance and stronger enforcement need to be implemented at national level. The VAT reform in 2011 has delivered important tools to ensure better protection against VAT fraud. The Quick Reaction Mechanism was implemented in June 2013 allows states more swiftly and effectively react to sudden, large scale cases of VAT fraud. The commission also believes that the simpler the system, the easier it is following the rules, and therefore they have intently focused on making the VAT system easier for businesses across Europe. In 2015 the One Stop Shop will enter into force in all e-businesses and enabling them filing one single VAT return for their activities across the entire EU.
 * VAT fraud and the European Union ** The system against VAT fraud is not strong enough. An estimated € 193 billion in VAT revenues, which is 1.5 % of GDP, was lost due to non-compliance or non-collection in 2011, a new study on the VAT Gap in member states. The entire VAT gap is not only due to fraud but also results from bankruptcies and insolvencies, statistical errors, delayed payments and legal avoidance. Effectively tackling VAT gap requires therefore a multi-pronged approach.