EU plans temporary fix to carbon tax fraud threat
LONDON, Sept 3 (Reuters) - The European Commission will propose a temporary solution to the threat of tax fraud in the European carbon emissions market later this month, a Commission spokeswoman told Reuters on Thursday. Experts have warned that a patchwork of unilateral actions by members states like the UK and France to prevent so-called carousel fraud in spot trading of EU carbon permits could serve only to push the suspected activity into neighbouring states.
Carousel fraud in the EU's $90 billion emissions trading scheme has been signalled as "an urgent problem which requires immediate action (and) the Commission is aware that uncoordinated action may cause the fraud to move from one country to another", the spokeswoman said in an email.
"Although further analysis is still required ... the information already provided by several member states is such that it is appropriate to take swift action."
Through carousel fraud, also called missing trader fraud, fraudsters import goods including mobile phones or computer chips free from value-added tax (VAT) from other EU countries, then sell the goods to domestic buyers, charging them VAT. The sellers then disappear without paying the tax to the government.
A Reuters investigation into the suspected fraud exposed a mix of tax loopholes, lack of regulatory oversight and easy market access that left the scheme open to abuse. [ID:nLR650665]
Last month, weeks after the UK and France exempted carbon credits from VAT, Britain's revenue and customs agency raided 27 properties around London following a seven-month investigation into a suspected 38 million pounds ($62 million) carousel fraud.
Nine people were arrested, but all have since been released without charge. [ID:nLK570500] (Reporting by Nina Chestney and Michael Szabo; editing by Sue Thomas)
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