VAT Fraud and Evasion : What Do We Know, and What Can be Done?

Author/Editor:

Stephen Smith ; Michael Keen

Publication Date:

February 1, 2007

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Like any tax, the VAT is vulnerable to evasion and fraud. But its credit and refund mechanism does offer unique opportunities for abuse, and this has recently become an urgent concern in the European Union (EU). This paper describes the main forms of noncompliance distinctive to a VAT, considers how they can be addressed, and assesses evidence on their extent in high-income countries. While the practical significance of current difficulties in the EU should not be over-stated, administrative measures alone may prove insufficient to deal with them, and a fundamental redesign of the VAT treatment of intra-community trade required. The current difficulties in the EU largely reflect circumstances that would not apply in the United States.

Series:

Working Paper No. 07/31

Subject:

English

Publication Date:

February 1, 2007

ISBN/ISSN:

9781451865950/1018-5941

Stock No:

WPIEA2007031

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

33

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