Reverse charging: the best possible solution for preventing VAT fraud

Abstract

Value added tax (VAT) has become an increasingly important source of public revenue in many states. However, its inherent characteristics entail various risks. This article points out the main forms of VAT fraud, focusing on missing trader and carousel fraud as the most dangerous and damaging types, and presents an overview of measures used to prevent tax fraud. Reverse taxation seems to be the most effective and easily applicable measure of the existing proposals which would considerably reduce tax fraud.