The tax authorities should be permitted if not obliged to refuse a taxable person the privilege to deduct input tax if they knew or should have known that a transaction before or after them in a chain of supply was involved in VAT fraud. The criminalization of fraud through tax law, outside the scope of the criminal legislation properly intended for that purpose, already raises concerns about taxpayers’ rights. On the other hand, the mere prospect of non-payment of a tax does not constitute tax fraud, making it almost impossible to conduct business with financially troubled enterprises.
Source: GVC
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