Europe Seeks to Close the VAT Gap
When it comes to VAT collection reform, as the UK goes, so goes the rest of Europe. Much of the effort is directed towards reducing the amount of VAT fraud that is plaguing the system. Estimates claim that a whopping 147 billion Euros are lost every year to VAT fraud. Not surprisingly, the UK has the third largest amount of loses among all 28 EU countries, with some 22 billion Euros in losses annually.
Digitizing the VAT collection process will help governments keep closer watch on spending that is VAT return eligible, making it easier to spot discrepancies between what is collected and what is owed. Subsequently, it also makes it easier for those claiming a refund on VAT paid in Europe to show that they are entitled to get their money back.
Other countries are starting to follow suit, led by Italy and Spain. As Europe continues to undergo a digital reconstruction, there is great hope that the Internet will help standardize the VAT system. As it stands today, each of the 28 countries have their own unique policies on VAT returns. Differences include the list of goods and services that are eligible for VAT return and deadlines on filing for repayment.
Greater control of VAT invoicing will also make the process more streamlined and transparent. All of this is good news for those who are not involved in fraud. Making it easier to pay taxes online while requiring payments more often should increase the flow of revenue for the governments. And that should speed up how long it takes governments to issue the repayments.
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