In a bid to tackle fraud the European Commission (EC) has launched a process to start negotiations with Russia and Norway on administrative cooperation agreements.

It has asked member states for a mandate to start such negotiations while it continues exploratory talks with these countries as well as a number of other important international partners such as Canada and China.

The agreements aim to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors due to the growth in these sectors.

Member states currently cooperate against VAT fraud by allowing each other access to their databases, and exchanging information (either automatically or on request) on taxpayers' activities.

The EC is proposing to extend the use of instruments such as Eurofisc - an effective network for member states to exchange information and intelligence on VAT fraud - to neighbouring countries, its main commercial partners, and countries considered to be leaders in the field of electronically supplied services, through cooperation agreements against VAT fraud.

Both Norway and Russia have already indicated that they are ready to start official negotiations.

Taxation commissioner Algirdas Aemeta that the supply chain has evolved dramatically since VAT was first implemented in the EU.

'Globalisation and e-commerce open up new windows of opportunity, but also create new risks. Fraudsters play on cross-border differences and information gaps between countries. The EU needs to work hand-in-hand with its international partners if it is to successfully combat VAT fraud. That is what the Commission is proposing today, with a request for negotiating mandates to formalise this cooperation,' said Aemeta.

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