The definitive VAT system and its impact on tax collection

Value Added Tax (VAT) is a significant source of fiscal revenues in the EU. However, the VAT treatment of cross-border supplies enables large-scale tax frauds, such as the Missing Trader Intra-Community (MTIC), which takes each year billions of euros from Member States' public budgets. In 2016...

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Autores principales:	Hana Zídková, Kristýna Balíková
Formato:	article
Lenguaje:	EN
Publicado:	University of A Coruna 2021
Materias:	definitive VAT system international trade statistics VAT action plan temporary VAT system MTIC fraud Political science J Political institutions and public administration (General) JF20-2112
Acceso en línea:	https://doaj.org/article/34e1d68cd0e8449c9b850ac035d538ba
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spelling	oai:doaj.org-article:34e1d68cd0e8449c9b850ac035d538ba2021-12-02T09:13:00ZThe definitive VAT system and its impact on tax collection10.17979/ejge.2021.10.2.78032254-7088https://doaj.org/article/34e1d68cd0e8449c9b850ac035d538ba2021-12-01T00:00:00Zhttps://revistas.udc.es/index.php/ejge/article/view/7803https://doaj.org/toc/2254-7088 Value Added Tax (VAT) is a significant source of fiscal revenues in the EU. However, the VAT treatment of cross-border supplies enables large-scale tax frauds, such as the Missing Trader Intra-Community (MTIC), which takes each year billions of euros from Member States' public budgets. In 2016 a definitive VAT system was proposed by the European Commission to respond to the shortcomings of the current temporary system. This new system should reduce the possibilities of MTIC fraud for intra-community transactions through the collection of VAT by the supplier in the same way as for domestic transactions. The tax collection by the supplier would impact the administrative costs of the financial authorities. This paper contributes to the discussion about the advantages and disadvantages of the newly suggested system. The analysis focuses on the study of the change in administrative costs and VAT revenues for individual Member States and across the EU. The results are that after implementing the definitive VAT system, total administrative costs of the Member States would increase at least by EUR 107 million, whereas total VAT revenues would rise by EUR 40 billion. This indicates the overall positive impact of the definitive VAT system for the EU. However, individual Member States would not benefit equally. The net exporters, whose intra-community supplies exceed the intra-community acquisitions, would spend more than others for the collection of VAT in connection with the international trade of goods. Hana ZídkováKristýna BalíkováUniversity of A Corunaarticledefinitive VAT systeminternational trade statisticsVAT action plantemporary VAT systemMTIC fraudPolitical scienceJPolitical institutions and public administration (General)JF20-2112ENEuropean Journal of Government and Economics, Vol 10, Iss 2 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	definitive VAT system international trade statistics VAT action plan temporary VAT system MTIC fraud Political science J Political institutions and public administration (General) JF20-2112
spellingShingle	definitive VAT system international trade statistics VAT action plan temporary VAT system MTIC fraud Political science J Political institutions and public administration (General) JF20-2112 Hana Zídková Kristýna Balíková The definitive VAT system and its impact on tax collection
description	Value Added Tax (VAT) is a significant source of fiscal revenues in the EU. However, the VAT treatment of cross-border supplies enables large-scale tax frauds, such as the Missing Trader Intra-Community (MTIC), which takes each year billions of euros from Member States' public budgets. In 2016 a definitive VAT system was proposed by the European Commission to respond to the shortcomings of the current temporary system. This new system should reduce the possibilities of MTIC fraud for intra-community transactions through the collection of VAT by the supplier in the same way as for domestic transactions. The tax collection by the supplier would impact the administrative costs of the financial authorities. This paper contributes to the discussion about the advantages and disadvantages of the newly suggested system. The analysis focuses on the study of the change in administrative costs and VAT revenues for individual Member States and across the EU. The results are that after implementing the definitive VAT system, total administrative costs of the Member States would increase at least by EUR 107 million, whereas total VAT revenues would rise by EUR 40 billion. This indicates the overall positive impact of the definitive VAT system for the EU. However, individual Member States would not benefit equally. The net exporters, whose intra-community supplies exceed the intra-community acquisitions, would spend more than others for the collection of VAT in connection with the international trade of goods.
format	article
author	Hana Zídková Kristýna Balíková
author_facet	Hana Zídková Kristýna Balíková
author_sort	Hana Zídková
title	The definitive VAT system and its impact on tax collection
title_short	The definitive VAT system and its impact on tax collection
title_full	The definitive VAT system and its impact on tax collection
title_fullStr	The definitive VAT system and its impact on tax collection
title_full_unstemmed	The definitive VAT system and its impact on tax collection
title_sort	definitive vat system and its impact on tax collection
publisher	University of A Coruna
publishDate	2021
url	https://doaj.org/article/34e1d68cd0e8449c9b850ac035d538ba
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The definitive VAT system and its impact on tax collection

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