Management of Tax Payments Under the Definitive Value Added Tax Regime
DOI:
https://doi.org/10.2478/eb-2018-0005Keywords:
Clearing system, definitive tax principle, tax fraud, value added taxAbstract
There is a large value added tax fraud in the European Union. The current value added tax system is universal as tax is applied to all parties involved in the chain transactions, thus creating a risk of tax losses if one of the parties involved in the chain transaction does not pay tax in good faith. There is the action plan to introduce the definitive value added tax to prevent tax fraud in intra-community transactions. However, in order to ensure normal value added tax administration in all member states, a number of measures are needed to be done. It is necessary to develop a mutual settlement mechanism in cases of intra-community transactions. The aim of this research is to develop a possible solution for the management of tax payments under the definitive value added tax regime. The results of the research show that to manage tax payments, several payment management systems can be used. However, as a solution, a special clearing system could be introduced. Quantitative research methods such as statistical methods were used in order to analyze the situation of tax fraud in EU and its main causes, as well as mathematical modeling methods to analyze the definitive VAT system and to calculate the balance between countries in an example for clearing mechanism.References
European Commission. (2011). “Green Paper” on the future of the VAT. Tax Executive, 63(3), p. 185.
Eurostat. (2017). International trade in goods. Retrieved from http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods#Intra-EU_trade_in_goods
Genser, B. (2003). Coordinating VATs between EU member states. International Tax and Public Finance, 10(6), 735-752. https://doi.org/10.1023/A:1026342206742
Haufler, A. (2012). Commodity Tax Harmonization in the European Community: A General Equilibrium Analysis of Tax Policy Options in the Internal Market. Studies in Contemporary Economics. Springer Science & Business Media.
Jurušs, M. (1999). Theoretical Aspects of Improvement of Tax System. Doctoral thesis. Riga: RTU.
Jennings, C. (2010). The EU VAT System-Time for a New Approach? International VAT Monitor, 21(4), p. 257.
Keen, M. (2000). Vivat, Cvat and All that: New Forms of Value-Added Tax for Federal Systems. IMF Working Paper No. 00/83. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=879610
Lockwod, B., De Meza, D., & Myles, G. (1995). On the European Union VAT Proposals: The Superiority of Origin over Destination Taxation. Fiscal Studies, 16, 1-17. Retrieved from http://people.exeter.ac.uk/gdmyles/papers/pdfs/ECOANDD.pdf
McLure, C. (2000). Implementing Subnational Value Added Taxes on Internal Trade: the Compensating VAT (CVAT). Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.199.8913&rep=rep1&type=pdf
Poniatowski, G., Bonch-Osmolovskiy, M., & Belkindas, M. (2016). Study and Reports on the VAT Gap in the EU-28 Member States: 2016 Final Report. EC. Retrieved from https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-report_final.pdf
Poddar, S., & English, M. (1997). Taxation of Financial Services under a Value-Added Tax: Applying the Cash-Flow Approach. National Tax Journal, 50(1), 89-112.
Smith, S. (1997). The Definitive Regime for VAT. Retrieved from https://www.ifs.org.uk/comms/comm63.pdf
Smith, S., & Keen, M. (2007). VAT Fraud and Evasion: What Do We Know, and What Can be Done? Retrieved from http://www.imf.org/en/Publications/WP/Issues/2016/12/31/VAT-Fraud-and-Evasion-What-Do-We-Know-and-What-Can-be-Done-20215
Vanistendael, F. (1995). Proposal for a Definitive VAT System Taxation in the Country of Origin at the Rate of the Country of Destination, without Clearing. EC Tax Review, 4, 45-53.
Wohlfahrt, B. (2011). European Union -The future of the European VAT system. International VAT Monitor, 22(6), 387-395. Retrieved from http://empcom.gov.in/WriteReadData/UserFiles/file/No_6%20A-4.pdf
Eurostat. (2017). International trade in goods. Retrieved from http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods#Intra-EU_trade_in_goods
Genser, B. (2003). Coordinating VATs between EU member states. International Tax and Public Finance, 10(6), 735-752. https://doi.org/10.1023/A:1026342206742
Haufler, A. (2012). Commodity Tax Harmonization in the European Community: A General Equilibrium Analysis of Tax Policy Options in the Internal Market. Studies in Contemporary Economics. Springer Science & Business Media.
Jurušs, M. (1999). Theoretical Aspects of Improvement of Tax System. Doctoral thesis. Riga: RTU.
Jennings, C. (2010). The EU VAT System-Time for a New Approach? International VAT Monitor, 21(4), p. 257.
Keen, M. (2000). Vivat, Cvat and All that: New Forms of Value-Added Tax for Federal Systems. IMF Working Paper No. 00/83. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=879610
Lockwod, B., De Meza, D., & Myles, G. (1995). On the European Union VAT Proposals: The Superiority of Origin over Destination Taxation. Fiscal Studies, 16, 1-17. Retrieved from http://people.exeter.ac.uk/gdmyles/papers/pdfs/ECOANDD.pdf
McLure, C. (2000). Implementing Subnational Value Added Taxes on Internal Trade: the Compensating VAT (CVAT). Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.199.8913&rep=rep1&type=pdf
Poniatowski, G., Bonch-Osmolovskiy, M., & Belkindas, M. (2016). Study and Reports on the VAT Gap in the EU-28 Member States: 2016 Final Report. EC. Retrieved from https://ec.europa.eu/taxation_customs/sites/taxation/files/2016-09_vat-gap-report_final.pdf
Poddar, S., & English, M. (1997). Taxation of Financial Services under a Value-Added Tax: Applying the Cash-Flow Approach. National Tax Journal, 50(1), 89-112.
Smith, S. (1997). The Definitive Regime for VAT. Retrieved from https://www.ifs.org.uk/comms/comm63.pdf
Smith, S., & Keen, M. (2007). VAT Fraud and Evasion: What Do We Know, and What Can be Done? Retrieved from http://www.imf.org/en/Publications/WP/Issues/2016/12/31/VAT-Fraud-and-Evasion-What-Do-We-Know-and-What-Can-be-Done-20215
Vanistendael, F. (1995). Proposal for a Definitive VAT System Taxation in the Country of Origin at the Rate of the Country of Destination, without Clearing. EC Tax Review, 4, 45-53.
Wohlfahrt, B. (2011). European Union -The future of the European VAT system. International VAT Monitor, 22(6), 387-395. Retrieved from http://empcom.gov.in/WriteReadData/UserFiles/file/No_6%20A-4.pdf
Downloads
Published
01.02.2018
Issue
Section
Articles
License
Copyright (c) 2018 Māris Jurušs, Ģirts Feldbergs (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
Jurušs, M., & Feldbergs, Ģirts. (2018). Management of Tax Payments Under the Definitive Value Added Tax Regime. Economics and Business, 32, 65-73. https://doi.org/10.2478/eb-2018-0005
