Tackling tax crime in a digitalised economy

Experts and speakers from 25 countries – including the United States and Ukraine – and organisations including the Organisation for Economic Co-operation and Development (OECD) and CEPOL, have attended a conference at the Tax Police School in Lido di Ostia (Rome) on tackling serious and organised tax crime.

The meeting was co-hosted by the Italian Guardia di Finanza and Belgium's Special Tax Inspectorate (ISI) on 27 and 28 November 2014. Europol's Economic Crime department welcomed experts, tax administrators, investigators and tax fraud prosecutors to the event to discuss the challenge of fighting tax crime in a digitalised economy.

Presentations focused on topics such as the prevention of and action against tax evasion in the e-commerce sector. An expert from Guardia di Finanza - Major General Gerli, Commander of the Public Finance Protection Unit - explained their experience of international tax evasion and avoidance. They have established an intensive programme of intervention by means of 'Planet Project', an intelligence analysis based initiative with the aim of tracking risk profiles, assessing them by matching and evaluating data from different sources, and eventually targeting tax audits more proficiently. Other important subjects on the agenda were e-commerce enabling foreign VAT fraud, the importance of network analysis and Internet monitoring, and the impact of digital currencies on global economies.

Speakers also gave overviews of practical cases and the tools used to solve them, such as the 'bulk data management' of the Belgian Special Tax Directorate and the Tools Against Financial and Economic Internet Crime (TAFEIC) by the Dutch Tax Service.

The exchange of information for tax purposes was strongly highlighted during the conference. Ms Grace Perez-Navarro, Deputy Director from the OECD, explained how G20 leaders at their meeting in September 2013 fully endorsed the OECD proposal for a truly global model for automatic exchange of information. They also invited the OECD, working with G20 countries, to develop such a new single standard for the automatic exchange of information, including the technical modalities, to better fight tax evasion and ensure tax compliance. In addition, information on the acquisition of significant assets can be used to evaluate the net worth of an individual, to see if the reported income reasonably supports the transaction. OECD have issued a manual on the implementation of the automatic exchange of information for tax purposes and this was described by Ms Perez-Navarro.

Europol also contributed to the event with a presentation by the European Cybercrime Centre (EC3) which focused on criminal activity on the darknet and the abuse of virtual currencies. Different aspects of the nature of the underground markets and the latest trends and developments in recent years were highlighted. An important issue touched upon was the gathering of intelligence on underground markets and some recent law enforcement actions that targeted those markets.

The speakers all agreed that the only way to effectively combat the threat of organised criminals exploiting global financial structures is by continuing timely international and interagency cooperation.

As Major General Gerli eloquently stated, "the industry of fraud is dynamic", with Grace Perez-Navarro from the OECD adding that "criminals do not operate in silos therefore why should tax administrations and law enforcement?"

The conference agreed that the tools to successfully fight the fraudsters in the e-commerce sector possibly already exist but more needs to be done to ensure that these tools are made available to the right people at the right time.

Carlo van Heuckelom, Business Manager of the Economic Crime unit at Europol, reiterated Europol's firm commitment to continue supporting Member States' law enforcement agencies to identify, disrupt and where possible dismantle the organised networks that set up or facilitate large scale tax fraud or tax evasion schemes. Europol will do this in cooperation with its partners and in the framework of the European Multidisciplinary Platform against Criminal Threats (EMPACT).