PwC Central and Eastern Europe has won the Global Innovation Challenge, a PwC competition that brings together the most innovative projects that help solve important issues for society with the Tax and Fraud Prevention platform. The platform is designed to prevent Value Added Tax (VAT) fraud and to protect bona fide companies from engaging in a VAT eluding chain. The Tax and Fraud Prevention project was developed by PwC Central and Eastern Europe’s Fiscal Consultancy and Forensics teams.
Central and Eastern European countries have the lowest level of VAT collection. According to European Commission data, Poland, the Czech Republic, Hungary, Romania and Slovakia have the largest VAT collection gap, which is in 2017 at over EUR 23.8 billion. At the same time, Missing Trader Intra Community (MTIC) fraud generates annual VAT losses between EUR 45 and EUR 53 billion across the European Union. In this context, a better collection of VAT revenues is particularly important to fund investment projects in infrastructure, education or health that are so much needed by the states in the region.
“The Tax and Fraud Prevention Platform has been declared a winner in a competition where 185 projects from nearly 75 countries have been registered. All the projects that reached the final were particularly competitive both in terms of the concept and the technical solution they had at the bottom. I think the difference has been made by the fact that this platform can be seen as a social responsibility project by PwC, because the mere prevention of VAT frauds brings added value to the community. At the same time, it provides the security that companies need when choosing their business partners, in order to avoid unpleasant situations in which good-faith taxpayers are drawn into fraudulent business chains, which generates both financial and reputational risks for companies,” said Daniel Anghel, Partner, Leader of PwC CEE Taxes and Indirect Taxes.
The Tax and Fraud Prevention Platform is made up of two online applications: VAT fraud tracker and FAIT (Fraud Assessment and Intelligence Tool). The VAT fraud tracker provides information on intra-Community trade between all Member States of the European Union and anomalies about transactions declared in a Member State as purchases compared to deliveries declared in another Member State.
The FAIT component of the platform performs a fraud-proofing survey for companies in Central and Eastern Europe. The advantages of the two applications are the timely identification of fraud and the interruption of the commercial relationship without costs. This is proof of goodwill on the part of the taxpayer and proof that all diligence has been taken to avoid a fraudulent chain. Last but not least, they also allow the analysis of the whole product portfolio from the point of view of the carousel fraud risk.