Brussels, 8/02/2013 (Agence Europe) - In plenary on 7 February 2013, the European Parliament (EP) adopted a report by David Costa (EPP, Malta) on the draft directive unveiled by the European Commission in July 2012 to amend the VAT directive in order to introduce a quick reaction mechanism (QRM) to tackle VAT fraud. The European Parliament is only being consulted over this, not having any legislative powers.
The QRM (see EUROPE 10667) will allow a member state that discovers tax fraud on a massive scale to take emergency measures not currently allowed under EU VAT rules. The QRM will let member states take measures not laid down in the EU rules to avoid the long authorisation process required to organise an exemption to the rules. The new procedure will enable them to get authorisation within a month for a temporary exemption to the rules, which can last for a year, so that they can tackle fraud rapidly while longer-lasting measures are gradually introduced (if necessary, while the exemption is in operation). The draft legislation includes self-assessment whereby VAT can be paid by the customer receiving the goods and services rather than the supplier, which will help avoid carrousel fraud and the like.
In the resolution, the European Parliament said the new legislation was pragmatic and would be effective against VAT fraud, meeting the EP's earler requests for further action to clamp down on tax evasion. The EP calls, however: for a consulation period before the new anti-fraud rules are introduced to ensure they are properly targeted and will be effective against the VAT fraud in question; for tax authorities to recognise that the measures put huge constraints on companies and that they must be used only for serious fraud and not as a way of putting pressure on companies; for the draft legislation to be accompanied by a long-term strategy for clamping down on fraud that is based on more structural changes to the VAT system. The complexity of VAT rules in the EU gives fraudsters a range of options, explains the EP, wanting the Commission to examine how exactly this complexity allows fraud to take place. The MEPs want self-assessment to avoid increasing constraints on business, given the extra costs for business of computer technology required when deciding whether to apply the self-assessment mechanism for particular product types. (FG/transl.fl)