Anti-abuse and anti-evasion measures in the VAT system of European countries as a key factor of sustainable development

Abstract

Inefficiencies in the collection of value-added tax (VAT), a tax that is a pillar of budgets of European Union (EU) Member States, caused by abuse of law and tax evasion, have a significant impact on the ability to finance sustainable development goals, specifically: poverty, hunger and malnutrition, education, health, infrastructure, and administration of the state. This chapter focuses on specific anti-evasion solutions applied both at the EU level and in individual Member States: international exchange of information, obligation of electronic collection and reporting of data on VAT transactions, one-stop-shop scheme for e-commerce transactions and related tools, domestic reverse charge and split payment. Since the efficiency of trade is based on the speed of information exchange and processing, the tax system must also apply the quality standards for information exchange that are available to the economy. The research suggests that the more “transparent” the trade is, the fewer opportunities for VAT fraud occur. In this case, the transparency may be achieved by the tax authority's quick access to reliable and cross-checked information.