Brussels, 23/04/2004 (Agence Europe) - The European Commission is planning to use information on suspicious financial transactions, collected in the fight against money laundering, to protect the Community's financial interests. In its latest report on administrative co-operation in the fight against VAT fraud, it announced that it is preparing a regulation proposal introducing new legal instruments for administrative assistance, in order to step up the fight against VAT and structural funds fraud. According to estimations by various Member States, losses related to VAT fraud could reach up to 10% of net VAT revenue. This fraud is related to the VAT collection system in countries of consumption rather than of origin, which can favour "carrousels" (whereby the company liable for VAT at the end of the commercial chain disappears). However, co-operation between governments is still poor: requests for mutual assistance grew by 18% between 1999 and 2000, and by 29% between 2000 and 2001, but half of all requests received no answer within the stated deadline. Furthermore, there are fewer and fewer multilateral checks, even though these are paid for out of the "Fiscalis" programme. There were 3 joint checks in 2003, 4 in 2002 and 8 in 2001, compared to 15 in 2000, "which was already low given the 1,500,000 business with intra-Community activity", said the Commission. It puts this weakness down to practical problems, and to the low priority granted by tax administrations to this type of check, and their lack of human resources.
The Commission has also identified legal shortfalls, notably secrecy laws which deny the authorities access to certain information. It also stated that in most of the Member States, it is not possible to bring someone to justice for fraud committed in another Member State. In order to remedy this, it "plans to propose, by the beginning of 2005, a framework decision under the third pillar to be transposed into national law". Despite these failings, the Commission has no plans for a bottom-up reform of the Vat system. Several options exist to change it, "but in all cases, the disadvantages far outweigh the benefits", it states. It concludes that "it is possible to fight fraud effectively in the framework of the current VAT system, as long as administrative co-operation and the efficiency of national control systems are both improved".