RTvat: The use of Real-Time technology to improve tax collection
Be part of the €325 million lost per day
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To organise a presentation or to talk in more depth about a real-time VAT solution, contact cwilliams@RTvat.eu
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Professor Ainsworth cites RTvat as providing the most promising solution for preventing Missing Trader fraud
“The only solution that is actually capable of preventing missing-trader fraud and also limits several other forms of fraud is RTvat...” “...RTvat is by far the most-promising and practical solution for a robust VAT system.” Richard T. Ainsworth, “Technology Can Solve MTIC Fraud – VLN, RTvat, D-VAT certification”, International VAT Monitor 3 (2011), pp. 153-160, cited with permission of IBFD, see http://online.ibfd.org/kbase/.
TAXUD Green Paper on the future of VATThe TAXUD Directorate of the European Commission has invited comments from interested parties on their recent Green Paper "On the future of VAT: Towards a simpler, more robust and efficient VAT system". Although this paper, which was produced following a report from PWC for which RTvat provided some input, contains some small steps towards a sensible technology-driven system in which VAT is split from the transaction and remitted directly to the Tax Authority, its proposed solutions contain a number of major flaws - and the timescales towards which they are working are ridiculously long. While we are losing €2 billion every week in uncollected VAT, can we afford to wait another 10-15 years to plug this gap? Below you can read a copy of the Green Paper, together with the response which RTvat has submitted to TAXUD. > TAXUD Green Paper on the future of VAT > RTvat response to the TAXUD paper
The huge losses in VAT revenue across the EU are well recognised, with latest figures from the Commission showing that only 55% of the potential VAT revenue is being realised. By introducing real-time collection across all Member States, this figure could be significantly improved and the resulting additional revenue to tax authorities and budgets would significantly ease many economies' current austerity issues. This presentation was given by Chris Williams to a meeting of the Interntional VAT Association in Amsterdam in May 2011. > See further details of the RTvat proposals on real-time VAT collection in the EU
The Real Time VAT Project - presentation by Chris Williams
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RTvat real-time tax solutions
For developing countries there is an opportunity to overhaul the tax administration at a fundamental level without the obstacle of outdated or legacy systems, moving directly to electronic collection and reporting. While changing from cash-based economies can be difficult at the consumer level, the encouragement of e-invoicing for B2B transactions can bring about simple, real time tax collection options. VAT Collection
This is money paid by the taxpayer which is being lost to the EU member state governments and put into the hands of criminals and fraudsters; just think what could be done with €325 million per day if it were channelled into schools, hospitals, charities or leisure and community projects. Alternatively, it's been estimated that if all the lost fraud were recovered, VAT could be cut by over 1% across the board. The collection of VAT on behalf of national tax authorities imposes an increasingly difficult and time-consuming adminsitrative burden on businesses both large and small, and the collection and reporting systems are largely unchanged since the tax was first introduced in the 1950's. The Real-Time Solution
Using technologies and control systems that are already well-established in the credit card industry and where relatively little re-scaling or re-configuration would be required, this can be achieved at low cost and with little difficulty for companies. The resulting system will meet the 2012 Lisbon target for the reduction of bureaucracy for all businesses. An intra-EU VAT solution of this kind will eradicate all carousel fraud and, at the same time, ensure a level playing field for all companies. In order to make this happen, we need the agreement and political will of all of the member states – and we need it quickly, so that we stop this enormous loss happening every day. It’s a simple and quick solution to a growing problem and could be put into place within just a couple of years. Other taxes
Emissions Trading
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From its initial focus on the specific problem of VAT fraud within the EU, RTvat has expanded its non-profit consultancy service to incorporate all areas of tax under-collection and fraud. The use of modern technology can bring about dramatic increases in tax revenue, while reducing the administrative burden for tax payers and collectors alike.
VAT fraud has been identified as a significant EU-wide problem, with current estimates showing costs to EU governments of over €120 billion per annum in lost tax, of which €25 billion is viewed as being directly linked to carousel fraud.
At RTvat, we believe there is a simple, effective and cost-efficient way to stamp out the opportunity for tax fraud and recover the billions of euros currently being lost, as well as significantly reducing the administrative and reporting requirements. It requires a change in the way that tax is collected and accounted for, moving away from a system based on invoices - which is complicated, creates a mismatch between business settlement cycles and tax settlements which is exploited by fraudsters and creates the need for many adjustments - and towards a system based on actual settlement of the transaction. 
The current and proposed systems of Emissions Trading in the EU and worldwide has been shown to be flawed and prone to fraud, with a number of major VAT carousel frauds already exposed leading to urgent and unilateral changes in tax law by a number of nations. At RTvat we are working with interested parties at all levels to design new systems making use of Real-Time technology that will ensure smooth and effective running of the Emissions Trading schemes.