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

February 1, 2007

Preview Citation

Format: Chicago

Stephen C. Smith, and Michael Keen. VAT Fraud and Evasion: What Do We Know, and What Can be Done?, (USA: International Monetary Fund, 2007) accessed September 18, 2024

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.

Subject: Consumption taxes, Exports, Income and capital gains taxes, International trade, Revenue administration, Tax fraud, Taxes, Value-added tax

Keywords: Audit, Compliance, Consumption taxes, Enforcement, Europe, Evasion rate, Exports, Firm B, Firm D, Income and capital gains taxes, Input VAT, Noncompliance, Registration threshold, Sales tax, Tax fraud, Unit price, United Kingdom VAT gap, Value-added tax, VAT accounts system, VAT administration, VAT chain, VAT due, VAT fraud, VAT gap, VAT noncompliance, VAT productivity, VAT revenue, WP

Publication Details

Pages:

33
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2007/031
Stock No:

WPIEA2007031
ISBN:

9781451865950
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers