Tax fraud, including in its role as financier to terrorism, was the topic of debate during two separate hearings of the European Parliament’s special committee TAX3 on Thursday.
Tax fraud, a cornerstone in financing terrorism
Members of the committee first held a hearing together with their counterparts from the special committee on terrorism, discussing the role that tax fraud, including VAT carousel fraud, plays in financing terrorism.
In this hearing members heard from an investigative journalist who reported on concrete cases, a Europol representative, an Attorney General working on financial crime, and a representative of Schwarzthal Kapital, a financial research company. The hearing showed how VAT fraud provides a crucial source of regular and easy funding for terrorist organisations, including the planners of the Paris attacks.
The TAX3 co-rapporteurs Luděk Niedermayer (EPP, CZ) asked whether the reforms to the EU VAT rules, and the increased global exchange of information would prove useful in reducing this source of funding for terrorist organisations. The other co-rapporteur, Jeppe Kofod (S&D, DK) asked what EU-level platform should be established to improve the exchange of information between national authorities to reduce carousel fraud.
Fighting VAT fraud
In the second hearing, the TAX3 members, discussed combating VAT fraud with representatives from the European Court of Auditors, the Commission, Eurofisc, and tax campaigner Richard Murphy.
The co-rapporteurs discussed with the experts the member states’ resistance to moving forward towards a definitve VAT regime and what next steps the Commission envisaged on VAT reform, including the introduction of favourable treatment to reliable taxable persons. They also discussed the need for EU countries to better acknowledge the serious problem posed by VAT fraud and the need to combat it.
Committee travels to Washington in July
From 16 to 18 July, committee members will travel to Washington where they will meet representatives from The Treasury, the Congres and FinCen (the Financial Crimes Enforcement Network). More information on this can be found here.