Parallel Audit of the Austrian Court of Audit and the Swiss Federal Audit Office - Controll of VAT

Report ID: 3

In a parallel audit the Austrian Court of Audit and the Swiss Federal Audit Office carried out a comparison of VAT inspections in the context of inspections on the premises in both countries. The year 2002 served as the basis for comparison, unless otherwise indicated.

Key Figures

In Switzerland there are approximately 300,000 registered entities liable to pay VAT; in Austria there are more than one million taxable entities. The comparatively high figure in Austria is due to approximately one million small enterprises subject to tax, the figure for these in Switzerland is only 186,600.

In Switzerland 160 inspectors were assigned to the VAT inspections, and they carried out approximately 6,700 audits. In Austria approximately 1,746 inspectors carried out around 42,500 audits, which – with the exception of special audits (Umsatzsteuer–Sonderprüfung) – concerned all attributable federal taxes.

In Switzerland, due to the activities of the inspectors, subsequent claims amounting to approximately EUR 164 million were made.

In Austria external audits led to EUR 1,293 million worth of subsequent tax claims, of which EUR 497 million concerned VAT.

In Switzerland an inspection resulted in a subsequent average VAT claim of approximately EUR 24,600 EUR, while in Austria the total subsequent average claim was approximately EUR 30,400, approximately EUR 11,700 of which was VAT.

In Switzerland, an inspector achieved on average subsequent claims of approximately EUR 1 million per annum, whereas in Austria the activities of an external auditor resulted on average in subsequent tax claims of approximately EUR 0.7 million, of which EUR 0.3 million concerned VAT.

The VAT system is similarly structured in both countries. However, existing differences should be taken into account in interpreting the comparison.

Legislation

The normal tax rate in Austria is 20 %, in Switzerland this is 7.6 %. The annual revenue level at which liability to value–added tax is incurred is considerably higher in Switzerland than in Austria.

This level is EUR 48,585 (CHF 75,000). In Austria tax liability is already incurred by annual revenues of more than EUR 22,000, which ex plains why so many small enterprises in Austria are registered to pay tax.

Organisational structure

In contrast to Switzerland, VAT in Austria is levied and inspected together with income tax and profits tax. 41 regional tax offices have been set up to this end. Monitoring the biggest enterprises is carried out by special organisational units.

The VAT inspections in Switzerland are carried out by the Federal Tax Administration (FTA) in Bern. The inspectors are based all over Switzerland.

Monitoring procedure

In Austria the procedure of a VAT–inspection is regulated in a published service regulation and is transparent for all involved. A concluding discussion on the premises about the results of the external audit is compulsory. The supplementary tax claims are stipulated by decree. Up–to–date controls are carried out using a special method, a special VAT audit (Umsatzsteuer–Sonderprüfung).

In Switzerland general information is published about the procedure concerning VAT inspections. The procedure has been standardized into three types of inspections.

Case selection and allocation

In Austria, tax offices draw up annual audit plans on the basis of three criteria (time, group and individual selection). The cases to be inspected over the coming weeks are assigned by the management.

In Switzerland, an inspector from the Federal Tax Administration receives a list of about 200 enterprises, (criteria–based selection and random selection) for several years, from which inspection cases are selected by the inspector himself. In addition, inspections which are particularly urgent are assigned by the management.

Controlling data

In Austria the relevant controlling data are published annually in a so–called “Anti–Fraud Report“.

In Switzerland there is a minimum of controlling data for internal use.

Audit of Value Added Tax

Report ID: 11

Prüfungsziel
Ziel der Gebarungsüberprüfung war die Untersuchung der Wirksamkeit der Betrugsbekämpfungsmaßnahmen des BMF, insbesondere der Steuerfahndung nach der Reform der Betrugsbekämpfungseinheiten im Jahr 2007. Der RH überprüfte bzw. analysierte schwerpunktmäßig

• die Erreichung der Ziele der Reform der Steuerfahndung,
• die Verfahrensabläufe und die organisatorische Eingliederung bzw. Ausgestaltung der Steuerfahndung,
• die Ressourcenausstattung der Steuerfahndung,
• das Managementinformationssystem der Steuerfahndung sowie
• die Zusammenarbeit und die Schnittstellen mit anderen Betrugsbekämpfungseinheiten im Bereich der Finanzverwaltung.

Intra-Community VAT fraud

Report ID: 16

In collaboration with the Dutch SAI (Algemeen Rekenkamer) and the German SAI (Bundesrechnungshof), the Belgian Court examined whether tax authorities are sufficiently resourced to combat VAT carousel fraud. The report to the federal Parliament with the findings for Belgium reveals that the department rightly prioritize fraud prevention and fraud detection. As a matter of fact it is very difficult to collect evaded VAT, VAT arrears and penalties when fraud carousels are involved. As far as prevention is concerned, the tax department performs an adequate review before assigning a VAT number. Tax authorities are insufficiently resourced to prevent malafide persons from infiltrating existing companies. The opportunities for international information exchanges are not used in an optimal way. The Eurocanet network created by Belgium allows for quick and targeted information exchanges between specialized tax authorities, but loses some of its impact because not all European Member States participate equally.

Intra-Community VAT fraud. Joint follow-up report

Report ID: 17

In 2009, the courts of the Netherlands (Algemene Rekenkamer), Germany (Bundesrechnungshof) and Belgium examined the treatment of intra-Community VAT fraud. As part of this audit, which was carried out in parallel with the Netherlands, Germany and Belgium, the central question raised was whether the tax authorities had sufficient resources to deal with this fraud. In the first part, the audit examines the measures available to the authorities to prevent malicious people from setting up fraud (prevention) systems. The audit then examines the available measures to detect and dismantle existing fraud schemes (detection). Finally, it analyzes whether the infringements found (and how many) have led to an effective recovery of the amounts of VAT due, arrears and fines (repression).

As part of a follow-up audit carried out in 2011-2012, the three courts examined the efforts made by the national administrations to implement the recommendations made in 2009.

The Court of Auditors acknowledges that the administration has taken initiatives to implement a number of recommendations. Thus, companies that file only "nil" statements are now being investigated more quickly.

In the area of ​​fraud prevention, efforts are still needed to make it possible to use the background information when assigning a VAT number. The Court also encourages the administration to intensify its efforts within the Benelux to formulate proposals for a uniform European policy on registration and cancellation.

Value Added Tax and Exercise Taxes

Report ID: 24

The present document provides information on the execution and results of parallel audits conducted by the Supreme Audit Office of the Czech Republic and the Supreme Audit Office of the Slovak Republic, which were both focused on the area of administration of value-added tax and excise taxes.

The cooperation between the two supreme audit institutions of the two countries is based on the Agreement on Audit Cooperation, signed in February 2004.

The topic of the parallel audits was chosen with a view to the fact that indirect taxes constitute very substantial revenue of the state budgets of both countries. The value-added tax structure, which allows for a refund of an excessive tax deduction, provides room for tax frauds and tax evasion. High excise tax rates, particularly those applying to tobacco and tobacco products, spirits and mineral oils, bring high profits to those who can dodge them by selling the commodities listed above illegally.

The Czech and Slovak Supreme Audit Office’s have established, inter alia, the following facts:

• Business transactions were not declared in the same way in both countries, which made corresponding exports and imports difficult to identify in the Czech and Slovak Customs Databases,
• Data entry errors in the above-mentioned customs databases made it impossible to identify some import and export transactions,
• Some exports from the Czech Republic failed to find and verify appropriate matching imports in the Slovak Repub1ic. Insofar as these cases are concerned, there exists a justified suspicion of fictitious exports for the purpose of illegally claiming a value-added tax return.
• Taxpaying entities failed to comply with certain Iegal obligations pertaining to reporting of exports and imports in value-added tax retum forms,
• Shortfalls and deficiencies were identified in the administration of value-added tax and excise taxes by Tax Offices and in their coordination with customs offices.