EU VAT fraud ‘Big Data’ proposal
EU Finance Ministers this weekend discussed the success of a ‘Big Data’ project which is attempting to tackle VAT fraud. The project, Transaction Network Analysis (TNA), operating in 10 EU states, seeks to identify cross-border ‘carousel fraud’, which is estimated to cost EU member states around €50billion in lost VAT revenues.
TNA is based on automated data mining of data provided by companies in their VAT returns. It includes building connectors between member states’ tax IT platforms to share transaction data and reporting in near real time. It monitors deviations in purchases and sales between vendors and purchasers, and other discrepancies between disclosures in the return.
The Dutch Presidency at ECOFIN raised the concept of extending TNA across all the EU member states on Saturday. The project, which has been operating for almost two years across the Benelux countries, now has 10 member states.
Challenges from other EU states
Some member states may resist the TNA plan. Countries such as the UK and Ireland do not collect sufficient data in their VAT returns, and would be reluctant to extend data requirements. Central and Eastern European states are championing a plan to use the domestic reverse charge on a more widespread basis.