The Background and Main Types of the Value Added Tax Fraud

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A value-added tax (VAT) can be defined as the fee charged on every step of production and distribution in a business, normally whenever an item is resold or even a value added to it. It is charged on the difference between the cost of buying an asset and its resell cost. Producers and distributers often pass this cost to the final consumer by raising the costs.

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There are two main types of VAT fraud as described below:

1. Frauds via money circulation: This is a kind of fraud that is committed by the that hide their actual money without revealing their real figures.

2. Increasing the VAT with credit balance: These types of frauds encompass the taxpayers efforts to find several purchasing bills for the false inexistent items or products that are only compiled by the bill value.

The Background of Turkish VAT System

The VAT Law of Turkey Number 3065 was published on November 2, 1984, but was implemented on January 1, 1985. This system charges VAT on the importation and supply or products.

The Background of European VAT System

In the EU, the VAT is a general, widely based consumption tax charged on the value added products. It applies to all products purchased or sold for any use.

First and Second Council Directives

First Council Directive: The aim of this directive is coordination of the regulations regarding the disclosure, the power of a firm organs representation and the nullity of the firms with limited liability.

Second Council Directive: This directive deals with the coordination of federal policies concerning the establishment of public limited liability companies, adjustments to capital and minimum share capital obligations.

Third, Fourth and Fifth Council Directives

Third Council Directive: This directive deals with establishment of the policies regarding mergers between the public limited liability companies that are within the same member states.

Fourth Council Directive: This directive deals with the coordination of the provisions of the member states and the contents of the fiscal accounts and fiscal reports, the methods of valuation utilized and their publication in accordance with all the companies with limited liability.

Fifth Council Directive: The Draft Fifth Law Directive is an EU proposal for a directive, essentially intended to implement a right of workers to participate in the voting to choose the boards of directors in big firms.

Sixth Council Directive

This directive stipulates the policies regarding the public limited liability companies divisions within the same member states and is always referred along with the third directive of company law.

White Paper from the Commission to the European Commission

Commission White Papers refers to the documents that have the proposal that require action by the EU in a particular area.

Council Directive 2006/112/EC of 28 November 2006 on the Common System of Value Added Tax

This codifies the provisions that control or govern the introduction of the common system of the system of VAT in the community.

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