This article focuses on the carousel of VAT fraud consisting in multiple undue VAT rebates for goods exported and re-exported between EU countries. This fraud has been developed as a form of border VAT adjustment since the abolition of the borders within the EU countries. The carousel is modelled as a Nash equilibrium chain-game beginning at the retail stage where fraudsters try to capture an unsatisfied demand for the traded goods by means of a reduction of its final price. This can occur because at the final stage the good can benefit from multiple subsidies deriving from undue VAT rebates and because of the power of the fraudster in affecting the prices of production factors. We explore the effects of the carousel fraud game on intra-community trade and analyse the implications for tax authorities.

Border tax adjustment without borders: The EU carousel of VAT fraud / Fedeli, Silvia; Forte, Francesco. - In: REVIEW OF ECONOMICS & FINANCE. - ISSN 1923-7529. - STAMPA. - 2:4(2012), pp. 55-70.

Border tax adjustment without borders: The EU carousel of VAT fraud

FEDELI, Silvia;FORTE, Francesco
2012

Abstract

This article focuses on the carousel of VAT fraud consisting in multiple undue VAT rebates for goods exported and re-exported between EU countries. This fraud has been developed as a form of border VAT adjustment since the abolition of the borders within the EU countries. The carousel is modelled as a Nash equilibrium chain-game beginning at the retail stage where fraudsters try to capture an unsatisfied demand for the traded goods by means of a reduction of its final price. This can occur because at the final stage the good can benefit from multiple subsidies deriving from undue VAT rebates and because of the power of the fraudster in affecting the prices of production factors. We explore the effects of the carousel fraud game on intra-community trade and analyse the implications for tax authorities.
European Union Value Added Tax, Income tax and VAT evasion, VAT carousel, Nash equilibrium fraud-chain
01 Pubblicazione su rivista::01a Articolo in rivista
Border tax adjustment without borders: The EU carousel of VAT fraud / Fedeli, Silvia; Forte, Francesco. - In: REVIEW OF ECONOMICS & FINANCE. - ISSN 1923-7529. - STAMPA. - 2:4(2012), pp. 55-70.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/507132
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