Value added tax phenomenon and consequences of carousels frauds as a result of fictive business relations
Value added tax phenomenon and consequences of carousels frauds as a result of fictive business relations

Summary/Abstract: Value added tax phenomenon is considered as highly actual and complex topic. Value added tax, VAT abbreviated, touches every aspect of nation´s, entrepreneur´s and non-entrepreneur´s economy. VAT is one of the national budget´s main income, from the point of view of a country. At the moment, every single European country has its system of VAT mechanism. Regrettably, large VAT frauds are committed within EU due to VAT administration and it´s bureaucracy system which is considered very complicated. Since last 6 years, EU average annual leak of VAT income is estimated at 150 EUR billion. Therefore, one of this article objective is to demonstrate the lack of VAT, that causes such enormous tax frauds and to propose a tax system which could be much efficient than the current system and could reduce tax frauds. A suitable tax that could be a substitution of the VAT is a turnover tax, based on our calculations showed below. Consequently, secondary article´s objective is scientific reasoning the benefits of turnover taxation.

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