SUPPRESSION OF CAROUSEL VAT FRAUDS IN ORDER TO PROTECT CROATIAN PUBLIC FINANCESJournal: Zbornik Veleučilišta u Rijeci - Journal of the Polytechnic of Rijeka (Vol.2, No. 1)
Publication Date: 2014-07-01
Authors : Denis Buterin; Nikolina Blašković; Eda Ribarić Aidone;
Page : 91-106
Keywords : carousel frauds; MTIC fraud; public finance; EU;
Carousel frauds are a systematic and organized way of extracting money from the state budget by exploiting flaws in the European tax system. The VAT on destination principle was adopted in the EU in 1993 as a temporary solution, but at present there is no indication that it will be replaced by the permanent one. Recently, monitoring and suppression have become more and more demanding tasks because the fraud system is based on trading an intangible asset, which is increasingly conducted electronically. This paper analyzes the technical functioning of carousel fraud and ways to combat it. It analyzes the current achievements in their prevention and highlights the difficulties that occur when efforts are made to prevent such practices by regular tax procedures. It is necessary to point out the seriousness of the problem and the threat to public finances which Croatia has become exposed to as a member of the EU. The paper emphasizes the role of supervisory authorities and the ministry in charge and proposes measures which Croatia could employ to effectively combat carousel frauds in its territory until permanent solution for the whole EU is found.
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