Traders call for EU response to carbon tax fraud
Britain's exemption of carbon emissions credits from value-added tax (VAT) is just a temporary fix for a fraud that will just resurface in other European Union countries, traders said, calling for an EU-wide response
Britain's exemption of carbon emissions credits from value-added tax (VAT) is just a temporary fix for a tax fraud that will just resurface in other European Union countries, traders said, calling for an EU-wide response.
On Thursday, the UK Treasury said it was acting to prevent the risk of carousel tax fraud, alleged to have occurred on a French emissions exchange earlier this year.
These allegations prompted the French government in June to make carbon credits VAT-free.
"While these moves will serve to flush out any criminal element that may have been operational in those countries, they do nothing to solve the problem for the EU carbon market as a whole," said James Emanuel, commercial director at brokers CantorCO2e.
"Any fraudsters will now simply set up camp in another EU jurisdiction.
"Through carousel fraud, also called missing trader fraud, fraudsters import goods VAT-free from other countries, then sell the goods to domestic buyers, charging them VAT.
The sellers then disappear without paying the tax to the government.The European Commission said on Friday it had been informed by EU member states that there was a strong suspicion of carousel fraud in carbon credit trading.
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