EU carbon market ’still open to VAT fraud’
Thursday September 3, 2009
The EU carbon credits market is still susceptible to VAT fraud, experts have warned.
Despite calls to tighten up the carbon market across Europe, a new investigation by Reuters reveals that there are still a number of tax loopholes and regulatory flaws open to exploitation by unscrupulous businesses.
The report found that although a few EU member states have taken action to curb tax fraud on carbon permits, scammers are simply moving into other countries which do not have similar stringent policies in place.
James Emanuel, a director at broker CantorCO2e, told Reuters: "Carbon permits are a tax on emissions and applying VAT to them is effectively putting a tax on a tax, which is kind of ludicrous."
David Bates, of emissions broker CarbonDesk, added that the fraud schemes put innocent intermediaries who are unknowingly complicit in the scams "in a very awkward position of responsibility and liability".
Last month, the UK’s tax authority HM Revenue & Customs made its first arrests in the country for VAT carbon credit fraud totalling some £38 million. 