The importance of VAT, Lenos C.S.

Introduction

The importance of VAT can hardly be overestimated. It is the largest single tax source for governments all over the world - certainly in the European Union. VAT affects all our daily financial transactions and provides governments with enormous incomes at relatively low perception costs, due to its system of self assessment. The role of (national) governments is merely to monitor the VAT processes.

Since customs frontiers between EU member states were abolished, businesses have been confronted with an increasing number of VAT obligations in other member states, as well as in their own. This is not only caused by the fact that businesses increasingly tend to develop activities outside their home country, but also by specific European regulations on intra-Community transactions.

In addition to VAT, import duties are levied on the importation of goods into the European Union. For financing its bodies, the European Union depends on the income it derives from these import duties and a percentage of the total VAT that the various member states collect.

Therefore, both national tax authorities and EU investigators are conducting more and more VAT and customs audits every year. It is within this checking system that businesses should seek professional assistance, in order to pay a just and (suitable) correct amount of VAT and import duty: no less, but certainly no more.