The European Parliament (EP) has called upon the EU executive and member states to reform the EU's current cross border tax regime in order to tighten up control over cross border tax evasion and fraud.
Approving a report submitted by British Liberal MEP Sharon Bowles, the EP agreed that the Commission and member states should revise the current rules particularly those related to the VAT and savings tax.
The report states that cross border tax evasion is currently costing the EU between €200 billion and €250 billion in loss of earnings which is supposed to go into the member states' tax coffers. According to conservative estimates, VAT fraud alone accounts for some €40 billion a year.
The EP report calls upon the EU to embark on a number of reforms in order to tackle this problem particularly by revising the current VAT legislation by introducing the concept of tax sharing and the country of origin provisions.
The best way forward is that in the long run a VAT system based on taxation in the country of origin of goods would be a solution to VAT fraud in cross border supplies. This, however, would require a clearing system for sharing revenue between member states.
The EP believes the best solution would be to impose a 15 per cent tax on intra-community supplies.
On fraud emanating from different saving tax systems in the EU, the EP called on a total revamp of the savings tax directive in order to remove existing loopholes.
MEPs said they want to see action against tax avoidance, a widening of the scope of the savings tax directive and action through the OECD to tackle uncooperative tax havens.
Without mentioning any names, the EP criticised those member states that are hindering reform of the savings tax directive.
According to EU laws, changes to taxation rules have to be supported by all the member states of the EU in order to come into force.
Commenting after the approval of this report, Ms Bowles said that it is now for the European Council to stop dragging its feet and show genuine political will in achieving the elimination of such costly fraud. "We need greater trust between national administrative authorities when it comes to sharing information on fiscal fraud, and a real will to change the cross border VAT system. This is simply not a problem that can be solved at member state level and it is for this reason why I am highlighting it as a priority for the EU," she said.
Approving a report submitted by British Liberal MEP Sharon Bowles, the EP agreed that the Commission and member states should revise the current rules particularly those related to the VAT and savings tax.
The report states that cross border tax evasion is currently costing the EU between €200 billion and €250 billion in loss of earnings which is supposed to go into the member states' tax coffers. According to conservative estimates, VAT fraud alone accounts for some €40 billion a year.
The EP report calls upon the EU to embark on a number of reforms in order to tackle this problem particularly by revising the current VAT legislation by introducing the concept of tax sharing and the country of origin provisions.
The best way forward is that in the long run a VAT system based on taxation in the country of origin of goods would be a solution to VAT fraud in cross border supplies. This, however, would require a clearing system for sharing revenue between member states.
The EP believes the best solution would be to impose a 15 per cent tax on intra-community supplies.
On fraud emanating from different saving tax systems in the EU, the EP called on a total revamp of the savings tax directive in order to remove existing loopholes.
MEPs said they want to see action against tax avoidance, a widening of the scope of the savings tax directive and action through the OECD to tackle uncooperative tax havens.
Without mentioning any names, the EP criticised those member states that are hindering reform of the savings tax directive.
According to EU laws, changes to taxation rules have to be supported by all the member states of the EU in order to come into force.
Commenting after the approval of this report, Ms Bowles said that it is now for the European Council to stop dragging its feet and show genuine political will in achieving the elimination of such costly fraud. "We need greater trust between national administrative authorities when it comes to sharing information on fiscal fraud, and a real will to change the cross border VAT system. This is simply not a problem that can be solved at member state level and it is for this reason why I am highlighting it as a priority for the EU," she said.