Document Type
Working Paper
Publication Date
10-24-2012
Language
en-US
Abstract
Recent estimates of the level of VAT fraud in the EU are commensurate with the EU budget. With the Green paper on the future of VAT, the European Commission stressed the urgency and necessity of comprehensive VAT reforms. This paper analyses the business and legal implications of the recently proposed split-payment mechanism, which, if implemented, would move VAT’s method of collection to real-time. The discussion is positioned in the context of two increasingly visible trends in the EU – the general shift towards greater reliance on indirect taxation and the growing popularity of electronic payment instruments. The potential implementation of VAT withholding would be a radical reform, given its shift of the taxation system from voluntary to forced compliance. We argue that, on the one hand, real-time VAT collection would constitute a potent preventive measure against VAT fraud, which could generate synergetic effects within SEPA, and further deepen integration through the harmonisation of VAT policies. On the other hand, real-time audit/refund would require tax authorities’ access to confidential business information that may be incompatible with EU privacy rules. The trade-off between efficient tax collection and privacy concerns mirrors the general debate on data protection in a cashless economy.
Recommended Citation
Richard T. Ainsworth & Boryana Madzharova,
Real-Time Collection of the Value-Added Tax: Some Business and Legal Implications
(2012).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/1448
Included in
Banking and Finance Law Commons, Criminal Law Commons, International Law Commons, International Trade Law Commons, Law and Economics Commons, Taxation-Transnational Commons, Tax Law Commons
