Future of value added tax in Europe

Abstract

Since the birth of the Value Added Tax, only 50 years ago, it has come to be adopted by more than 130 countries, including not only all OECD 1 members, but also many developing co untries. The actual VAT system generates high and disproportionate risks for business, the unpaid tax collectors, due to non - legitimate traders committing fraud. Fraud - prevention measures taken increase the complexity of the current VAT system for legitima te traders, create legal uncertainty when doing business in the EU and shift risks to legitimate traders. The complexity of European VAT system and the legal uncertainty multiply VAT disputes and litigation in the Member States and at the Court of Justice of the EU. So now is an appropriate time to reflect on the VAT system. What it has established properly or not. However, Member States of European Union are not accepting the following situation there the rates of VAT are too different and there is no adeq uate mechanism to redistribute VAT receipts to mirror actual consumption. My purpose in this paper is to stimulate further interest in the VAT system in European Union and propose the theoretical guidelines for the new VAT system to establish in Europe, wh ich has been extraordinary maltreated in the academic literature until nowadays.