UNITED AGAINST VAT FRAUD?

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• UNITED AGAINST VAT FRAUD?
• PRACTICAL ASPECTS OF COOPERATION BETWEEN MEMBER
  STATES AND EU INSTITUTIONS
• SLOVENIAN PRESPECTIVE
• Marjetka Štemberger, M.Sc.

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THE MISSION
The Tax Administration provides taxpayers with
services of the highest quality and in this way
it assists them at tax compliance with fair and
unbiased use of tax regulations.
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ORGANISATION OF THE TAX ADMINISTRATION

• The Tax Administration of the Republic of
  Slovenia is a constituent part of the Ministry of
  Finance.
• It consists of
• General Tax Office,
• 15 tax offices with branches,
• Special Tax Office (Large Business Office).

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REGIONAL TAX OFFICES WITH BRANCHES
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FIELDS OF INTERNATIONAL INFORMATION EXCHANGE
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NEED FOR EXCHANGE OF INFORMATION

• Globalisation of economies and removal of
  exchange controls and other barriers to the free
  movement of capital promote economic development
  and world trade.
• BUT
• increase possibilities of tax avoidance and
  evasion, which have effects on fiscal equity and
  on budgets, as well as they distort international
  competition.
• European Union free movement of goods and
  services removal of tax borders between MS.
• THUS
• Need to control the correct application of the
  VAT rules an international problem.

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ADMINISTRATIVE COOPERATION (1)

• COUNCIL REGULATION (EC) NO 1798/2003 of 7 October
  2003 on administrative cooperation in the field
  of value added tax and repealing Regulation (EEC)
  No 218/92.
• COMMISSION REGULATION (EC) No 1925/2004 of 29
  October 2004 laying down detailed rules for
  implementing certain provisions of Council
  Regulation (EC) concerning administrative
  cooperation in the field of value-added tax.
• Exchange of information on request
• Request for information and for administrative
  enquires,
• Presence in administrative offices and
  participation in administrative enquires,
• Simultaneous controls.
• Request for administrative notification

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ADMINISTRATIVE COOPERATION (2)

• Exchange of information without prior request
• automatic exchange,
• structured automatic exchange.
• Categories of information to be exchanged without
  prior request regarding
• Sales of new transport vehicles,
• Long-distance sale which is not VAT applicable,
• Information about possible deviations and
  misconducts in transactions of goods in EU
  VIES,
• Information on (potential) "missing traders" but
  VAT identification number has not been cancelled,
• Information on (potential) "missing traders"
  taxpayer and ID number cessation.

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CLO (Central liaison office)

• The main tasks of CLO are as follows
• Transfer of VIES data
• VAT number validation service
• VAT control
• Regular checking,
• Support to auditors (controllers and auditors),
• Mutual assistance.
• Coordination and distribution of information
• Administrative cooperation (translations,
  requests and answers must be completed and
  understandable, taking care of deadlines, etc.)
• CLO located at General Tax Office
• 3 employees
• contact person at each local office

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HOW CLO FUNCTIONS AT LOCAL LEVELS?
Director of the General Tax Office
General Office
Local Office
organisation
function
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EXCHANGE OF INFORMATION ON REQUEST (1)

• CLO receives the SCAC 2004 form or SCAC 383 form
  via CCN/CSI
• Work procedure
• Inspection of the form (as well as checking of
  the eligibility),
• Data verification of the taxable person
  established in Slovenia and the taxable person
  established abroad,
• Verification of turnover data in the VIES system,
• Translation of the form,
• Deposition of the original form, of the
  translation and of any eventual documentation on
  the authorised tax office (on the directory),
• Notification of the tax office employee, who is
  responsible for CLO, about the reception of the
  form and establishing a 1-month deadline for
  finding a solution (defining a date),
• In case that the tax office was not able to
  acquire information by the imposed deadline, it
  has to report it to CLO nevertheless we follow
  the principle that the applicant state is
  notified about each discovered case in a required
  3-month period,
• Reception of the answer from the tax office,
• CLO verifies the answers, checks the VIES system
  data, translates answers and together with any
  eventual documentation sends them to the
  applicant state via CCN/CSI e-mail.

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EXCHANGE OF INFORMATION ON REQUEST (2)

• CLO receives the SCAC 2004 form or SCAC 383 form
  from the tax office via the directory
• Work procedure
• Inspection of the form (as well as checking of
  the eligibility),
• Data verification of the taxable person
  established in Slovenia and the taxable person
  established abroad,
• Verification of turnover data in the VIES system,
• Translation of the form,
• Sending the form and the eventual documentation
  to the requested state via CCN/CSI e-mail,
• Reception of the answer from the requested state,
• Verification of the answers and of the
  documentation,
• Translation of the answers,
• Deposition of the original form, of the
  translation and of any eventual documentation to
  the directory,
• Notification of the tax office employee, who is
  responsible for CLO, about the reception of the
  answer.

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PROCEDURES IN DEVIATION ANALISYS OF DATA OF THE
LIABLE PERSON AND VIES
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STATISTICS -REQUEST FOR INFORMATION (Article 5)
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SPONTANEOUS EXCHANGE OF INFORMATION (1)

• CLO receives spontaneous information in the SCAC
  2004 form or SCAC 383 form via CCN/CSI e-mail
• Work procedure
• Inspection of the information,
• Data verification of the taxable person
  established in Slovenia and the taxable person
  established abroad,
• Verification of turnover data in the VIES system,
  
• Translation of the spontaneous information,
• Deposition of the original form, of the
  translation and of any eventual documentation on
  the authorised tax office (to the directory),
• Notification of the tax office employee, who is
  responsible for CLO, about the reception of the
  spontaneous information and establishing a
  1-month deadline for a feedback information
  (defining a date),
• Reception of the answer to the spontaneous
  information from the tax office,
• CLO verifies the answers, checks the VIES system
  data, translates findings and together with any
  possible documentation sends them to the
  applicant state via CCN/CSI e-mail.

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SPONTANEOUS EXCHANGE OF INFORMATION (2)

• CLO receives spontaneous information in the SCAC
  2004 form or SCAC 383 form from the tax office
  via the directory
• Work procedure
• Inspection of the spontaneous information,
• Data verification of the taxable person
  established in Slovenia and the taxable person
  established abroad,
• Verification of turnover data in the VIES system,
• Translation of the spontaneous information,
• Sending the spontaneous information and the
  eventual documentation to the relevant Member
  State via CCN/CSI e-mail,
• Reception of the eventual answer from the Member
  State,
• Verification of the answer,
• Translation of the answers,
• Deposition of the original answer, of the
  translation and of the eventual documentation to
  the directory,
• Notification of the tax office employee, who is
  responsible for CLO, about the reception of the
  answer.

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AUTOMATIC AND STRUCTURED AUTOMATIC EXCHANGE OF
INFORMATIONInformation sent
AUTOMATIC AND STRUCTURED AUTOMATIC EXCHANGE OF
INFORMATION Information sent
Calendar year New means of transport VAT Refund Allocation of VAT ID number Information of missing traders Information about potencial missing traders
2005 337 691 145 - -
2006 61 2,854 55 16 22
2007 357 3,672 97 182 72
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AUTOMATIC AND STRUCTURED AUTOMATIC EXCHANGE OF
INFORMATIONInformation sent
AUTOMATIC AND STRUCTURED AUTOMATIC EXCHANGE OF
INFORMATION Information received
Calendar year New means of transport VAT Refund Allocation of VAT ID number Information about potencial missing traders Information of missing traders
2005 - 1,658 - - -
2006 27 2,138 55 - 276
2007 9 5,361 63 - 5,702
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SUPERVISION PROCEDURES

• Introduction of system supervision over newly
  registered companies for VAT,
• Introduction of computer-supported auditing with
  ACL programme,
• Introduction of procedure of pre-registration
  supervision at allocation of identification
  number for VAT purposes,
• Introduction of procedure for cancellation of
  identification number for VAT purposes out of
  official duty,
• Introduction of rotation audits,
• Introduction of special audit supervision
  methodology in cases of carousel evasion or
  missing trader frauds,
• Preparation of a special programme of annual tax
  audit supervision for VAT and definition of risk
  areas in connection with VAT.

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ORGANISATIONAL MEASURES

• Establishing of an investigative and analytical
  service which deals with prevention and
  discovering of tax evasion (mainly in the field
  of VAT).
• VAT group which provides uniformity and legality
  of decision-making in tax audit supervision on
  the central level with the assistance of
  preventive methods - support to the inspector at
  decision-making in more difficult cases.
• Introduction of specialists for individual fields
  - construction, services for guests (hotels,
  restaurants, etc.), transfer pricing, sale of
  cars, computer-supported auditing.
• Starting with supervised projects on the field
  of construction and motor vehicle.

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PROJECT MANAGAMENT OF TAX AUDIT

• Starting February 2008 (2 projects Construction
  and Motor Vehicle)
• Involved 70 of the resources (tax auditors)
• ADVANTAGES
• Monthly meetings spread a good and equal
  practice on the whole area of Tax Administration,
  frequent communication between auditors,
• Specialization of auditors,
• Audits are quick and effective,
• Public announcement increase of voluntary
  compliance of tax liabilities,
• Cooperation between departments in Tax
  Administration.

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CHANGES OF THE VAT ACT

• Newly registered persons liable for VAT shall
  submit monthly settlements during the period of
  one year - quicker reaction time for discovering
  missing trader companies.
• Shortening of the time limit for withdrawal of
  VAT identification number if the taxable person
  fails to submit VAT settlements from 12 to 6
  months (for foreign persons from 6 to 3 months) -
  possibility of withdrawal of VAT identification
  number without a special declaratory procedure.
• Possibility of withdrawal (cancellation) of VAT
  identification number according to the official
  procedure in cases where the taxable person fails
  to meet requirements for registration - missing
  trader companies.

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CHANGES OF THE VAT ACT FIGHT AGAINST VAT
EVASION

• Possibility of temporary insurance between audit
  procedure in cases of doubtful higher claims for
  VAT refund.
• Possibility of requesting insurance or requesting
  warranty in cases of suspicious large VAT refund
  requests - before VAT refund, the taxable person
  shall submit appropriate insurance or warranty,
  from which possible obligations in cases of
  illegal claim may be paid.

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OBJECTIVES

• Achieving higher level of quality and not
  quantity of work, and with this improvement of
  voluntary tax compliance and provision of
  uniformity of tax administration's operations.
• Provision of uniqueness of taxation in cases of
  international transactions and tax frauds  with
  the system of taxation of transactions according
  to their economic contents.

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COOPERATION WITH STATE INSTUTIONS

• The quality of supervision division performance
  depends also on effective cooperation with the
  following state institutions
• Customs Administration,
• Office for Money Laundering Prevention,
• General police Office,
• State prosecution,
• Court of Auditors of the Republic of Slovenia,
• Budget Supervision Office.

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ESTIMATED ADDITIONAL LIABILITIESIN THE PERIOD
BETWEEN 2006 AND 31 MARCH, 2008
Calendar Year Number of audits Estimated Additional Liabilities in Out of which VAT in Number of persons liable to VAT Number of all inspectors (average)
2006 5,069 69,058,738.11 31,045,447.34 89,085 358
2007 6,278 87,067,610.00 38,367,988.80 87,163 362
2008 (1st quarter) 1,667 23,043,444.60 11,479,996.62 88,381 335   
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CONCLUSION

• Adoption of all necessary measures against tax
  frauds to prevent distortion of competition on
  the common market.
• Operation of infrastructure for communication and
  information exchange and provision of uniform
  application of the Community law.
• It requires a high common standard of
  understanding of the Community law and its
  application in all Member States.
• We achieve this only with effective training and
  national legal and transparent control procedures
  with more intensive and effective information
  exchange in the field of prevention of tax
  frauds.

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THANK YOU FOR YOUR ATTENTION!