Tax Professionals Support VAT Fraud Provision, With Caveats

Tax professionals warned EU lawmakers a charging mechanism to fight value-added tax fraud should remain targeted and temporary rather than become a permanent substitute for deeper reform despite its benefits.

The so-called reverse charge mechanism has helped curb fraud in high-risk sectors by shifting VAT liability from suppliers to customers, according to tax professionals speaking at a European Parliament tax subcommittee hearing Tuesday.

But they cautioned that wider use could undermine the tax’s core design, increase complexity for businesses and push fraud into other sectors or countries. The European Commission notes that the bloc loses €128 billion every year to ...