Distinctive Features and Scope of Carousel Frauds

6th International Scientific Conference – EMAN 2022 – Economics and Management: How to Cope With Disrupted Times, Ljubljana, Slovenia, March 24, 2022, CONFERENCE PROCEEDINGS, published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; ISBN 978-86-80194-57-8, ISSN 2683-4510

 Abstract:

One of the main characteristics of carousel fraud relates to “zero-rate” VAT system on intra-community trade regarding the obligation to collect and pay VAT on the acquisition of goods and the right to deduct the same amount as input VAT. Therefore, at the next sale of the same good, the taxpayer can collect VAT and “disappear” without remitting the collected tax. The next taxpayer demands from the tax authority the refund of the same VAT that the previous taxpayer did not pay to the state budget, thus committing the criminal offense of tax evasion which is a predicate offense of money laundering. The conduction of transactions within the framework of carousel fraud generates income suitable for the further process of money laun­dering, although money laundering is possible through the process of carousel fraud as well.

Keywords:

Value added tax; Input VAT; Tax evasion; Reverse charge; Tax administration; International cooperation; Buffer

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