An analysis of selected EU measures combating cross-border e-commerce vat fraud

Purpose: This study analyses VIES, the RCM, Recapitulative Statements, the Quick Fixes, the E-Commerce Package, CESOP and ViDA. It analyses the implications of the requirements of these measures, or the expected implications in the case of upcoming measures, on local tax practitioners and the perceived implications on local businesses. Local perspectives on their effectiveness in combating CE VAT fraud are also assessed. Lastly, this study evaluates recommendations for their improvements and for further EU and national measures to combat CE VAT fraud. Design: A mixed-methods approach was adopted. In total, 19 semi-structured interviews were conducted with 17 local tax practitioners and 2 MTCA officials. Findings: The selected measures’ implications on tax practitioners include time spent on education and training, increased workloads, and closer client cooperation, although their extensive requirements can also strain practitioner-client relationships. Automation under ViDA is expected to shift practitioners towards consulting and system design roles. Perceived implications on in-scope local businesses include implementation and compliance costs, yet these vary across the selected measures. Mixed growth and competitivity implications were also highlighted, with smaller businesses being disproportionately affected. All the measures were rated as effective or very effective against CE VAT fraud, with ViDA rated highest and the RCM lowest. Several local and EU factors hinder the selected measures’ effectiveness and broader efforts to combat CE VAT fraud. Measures beyond VAT are also effective against such fraud. Recommendations for the selected measures’ improvements centred around the e-commerce package, CESOP and ViDA. Additional EU anti-CE VAT fraud measures could involve simplifying the VAT system, enhancing proactivity, cash-tracking, and post-implementation studies as a new yardstick for success. Nationally, enhancing MTCA’s enforcement, domestic digital reporting requirements, education, financial incentives and increasing penalties can help. Artificial intelligence and blockchain hold great potential against CE VAT fraud, but prospects for the split payment mechanism and the definitive system are uncertain. Conclusion: The fight against CE VAT fraud is interminable as fraudsters continuously seek new avenues for evasion. Thus, the necessity for enhancing existing anti-CE VAT fraud measures and implementing new ones will never cease. However, designing the perfect VAT measure is impossible. Indeed, the selected measures have various shortcomings and negative implications, as found in this study. Yet, this should not discourage efforts to curb CE VAT fraud. Value: This study sheds light on the selected measures’ implications on tax practitioners and businesses, and on their strengths and shortcomings in combating CE VAT fraud. The recommendations for their improvements and for further measures can contribute to the building of a more robust, e-commerce-compatible VAT system. Additionally, the researcher’s proposed recommendations can help alleviate the negative implications noted, and further combat CE VAT fraud.

Grantor dc:publisher.institution

University of Malta

Year dc:date.issued

2024

• Value-added tax -- Malta
• Electronic commerce -- Malta
• Tax evasion -- Malta

Statement dc:rights

• info:eu-repo/semantics/restrictedAccess

Language dc:language.iso

en

Repository record dc:identifier.uri

https://www.um.edu.mt/library/oar/handle/123456789/128326

OAI identifier oai:identifier

oai:www.um.edu.mt:123456789/128326