The European Commission has made a call for tenders on the feasibility of new methods for collecting VAT through modern technologies

The European Commission has made a call for tenders on the feasibility of new methods for collecting VAT through modern technologies or via financial intermediaries

Full details of the envisaged study can be found at http://ted.europa.eu/Exec;jsessionid=CBD634F203A889DFDBD2F40B32792990.instance_1?DataFlow=N_one_doc_access.dfl&Template=TED/N_one_result_detail_curr.htm&docnumber=239610-2009&docId=239610-2009&StatLang=EN

The Commission has identified the need for a coordinated strategy to improve the fight against VAT fraud in the EU and its intention to launch a reflection on a longer term perspective about the management of the VAT system and in particular about the ways in which businesses and tax administrations communicate with each other.

The Commission expects to have the results of this study in 2010 when it will look at the options for modernising the VAT system.

European Commission focuses on real time VAT collection

On the strength of a submission from RTvat to the High Level Group of Independent Stakeholder on Administrative Burdens (also known as the Stoiber Group), the Commission has recognised the role of that the introduction of a real time VAT collection could have in reducing the high administrative burdens that blight the existing EU VAT system.

On 22 October last in a Communication from the Commission to the European Parliament and the Council entitled "Action Programme for Reducing Administrative Burdens in the EU", a real time VAT system is listed for consideration by the incoming Commission in 2010. The full report is available at http://ec.europa.eu/enterprise/policies/better-regulation/files/com_2009_544_main_fr.pdf.

The findings on real time VAT can be found in the Annex, setting out recommendations on page 88 under point 11 – "sectoral reduction plan for taxation".

This is a welcome recognition for the RTvat model.

Serious losses in VAT confirmed at over €100 billion per year

The European Commission has engaged Reckon LLP, the London based economic consultancy group, to assess the revenue lost through shortcomings in the EU's VAT system.

The Commission has now published this report and the full text is available at http://ec.europa.eu/taxation_customs/resources/documents/taxation/tax_cooperation/combating_tax_fraud/reckon_report_sep2009.pdf .

The findings cover 24 Member States (Cyprus, Bulgaria and Romania are not included) and conclude firm that the total VAT gap for these countries for 2006 was €107 billion or 12% of receipts.

This shortfall is a consequence of fraud in the system, tax unpaid because of trader insolvency but also includes the cost to tax administrations of legitimate tax avoidance measures. Although confirming the seriousness of the shortfall, the report does not seek to break it down over these different headings.

The full report should be read by anybody who is worried about the waste of public resources outlined here. It can only be hoped that the figures here become a wake-up call for politicians.