Economic crime report 2004 - Ekobrottsmyndigheten

Opportunity Structure
The opportunity to commit VAT fraud consists in the existence of a tax,
the payment of which can be avoided or even manipulated so as to actually
extort tax revenue from the state. The fact that Sweden has the highest
VAT rates in the EU makes it that much more attractive to commit
fraud there.
Monitoring and Supervision
The tax authorities and Customs, and to a lesser degree other agencies,
employ a number of monitoring and supervisory strategies to combat
VAT fraud. But there are no simple systematic solutions that can fully
eliminate the problem. Sweden’s membership in EU, which follows the
destination principle, opened the door to new types of fraud that are difficult
to monitor. For instance, VAT carousel fraud and VAT fraud linked
to cash dealings in food products from other EU countries are the subject
of a nationwide interagency monitoring project. Any empirical study on
the scope of VAT fraud as described above should also include a badly
needed overview of such monitoring efforts.
Values and Attitudes
People engaged in various types of VAT evasion presumably have a favourable
view of what they do. Consumers are complicit in many respects,
given that they are more than willing to purchase goods or services that
are “exempt from VAT” at unusually low prices.
Impact
The state loses major revenues. Competition becomes distorted when
some businesses can offer lower prices than their rivals by virtue of not
paying VAT. That has a ripple effect in that companies may turn to crime
in order to survive.
Trends Over the Next Three Years
Assuming that agencies continue to have the same monitoring resources
and strategies at their disposal, the occurrence of VAT fraud is highly
unlikely to decrease. The more probable scenario is that it will increase as
Swedes become further integrated into an EU that has just taken in ten
new members.
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