Global

Details

  • Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/31/2012

European Union - Proposal for improved response to VAT fraud 

July 31:   The European Commission (EC) today adopted a proposal for a new instrument that would allow EU Member States to respond more swiftly and efficiently to value added tax (VAT) fraud.

According to the EC release (IP/12/868 31 July 2012), the proposed instrument—the Quick Reaction Mechanism—enables a Member State to implement certain emergency measures in a way that is currently not allowed under VAT law.


Specifically, the proposal provides that Member States would be able to apply, within the space of one month, a "reverse charge mechanism," which makes the recipient—rather than the supplier of the goods or services—liable for VAT.


The aim of this proposal is to address complex fraud schemes, such as “carrousel” fraud.


The European Commission also provided a related memo (MEMO/12/609) containing “frequently asked questions” (FAQs) concerning the Quick Reaction Mechanism.




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