European Parliament: MEPs resolve to clamp down on tobacco smuggling

Thursday, 31 January 2019 11:44

Decrease in fraud cases concerning EU budget raises questions about detection More action needed to tackle VAT fraud More needs to be done to combat tobacco smuggling, currently robbing the EU and Member States’ budgets of revenue worth €10 billion a year, MEPs say in a resolution adopted on...Request free trial

Decrease in fraud cases concerning EU budget raises questions about detection
More action needed to tackle VAT fraud

More needs to be done to combat tobacco smuggling, currently robbing the EU and Member States’ budgets of revenue worth €10 billion a year, MEPs say in a resolution adopted on Thursday.

To combat the illegal business that feeds organised crime, including terrorism, Member States should step up cooperation and exchange of information, says the resolution on the Commission’s annual report about the protection of EU’s financial interests.

Concerns about fraud detection

While the total number of reported “fraudulent irregularities” continued the downward trend seen since 2014, MEPs are concerned it might reflect detection problems and not a genuine reduction in fraud. They call on the Commission to establish a uniform system for the collection of comparable data.

Moreover, MEPs are worried that some Member States regularly do not report a single case of fraud. They invite the Commission to investigate the situation and to run random spot checks in these countries.

Tackle VAT fraud, MEPs say

MEPs are also concerned about losses due to the VAT gap and fraud. According to the Commission’s statistics, VAT gap in 2016 amounted to €147 billion, which represents more than 12 % of total expected VAT revenue. The Commission estimates that intra-Community VAT fraud cases cost the Union around €50 billion annually. MEPs call on the Member States to step up the efforts in tackling VAT fraud.

Other key findings and requests

Total number of fraudulent and non-fraudulent irregularities reported in 2018 was 20.8% lower than in 2016, value down by 13%;
The Commission should improve the recovery rate for fraudulent cases, only 37% in 1989 - 2017;
The Commission should resume publishing an anti-corruption report and develop a corruption index in order to rank the Member States.

The resolution was adopted by 509 votes to 88 with 46 abstentions.

Background

The European Commission prepares an annual report on the performance of EU member states and the Commission itself in fighting fraud against EU’s financial interests. The Parliament, building up on reports by the EU’s anti-fraud office, OLAF, the Court of Auditors etc, adopts a resolution on the report. The resolution evaluates the progress made over the past year and points to areas needing imminent action.

Around 74% of EU budget spending is managed by member states in areas such as agriculture, growth and cohesion policy (European Structural and Investment funds). Member states are also primarily responsible for the collection of the EU’s own resources in the form of VAT and customs duties.

The European Commission is ultimately responsible for this spending and should claw back all unduly paid funds, whether resulting from error, irregularity or deliberate fraud. National governments are also responsible for protecting EU financial interests, which involves cooperation with the Commission and OLAF.