Improving the protection and resilience of victims and enablers

Improving the protection and resilience of victims and enablers

There has been an intriguing notion held by some sections of practitioners, taxpayers and scholars in the tax crime ecosystem that tax crimes are victimless crimes as they have no direct victims. On the contrary, there are identifiable victims as evidence from PROTAX research and direct engagements with practitioners and end-users show, although the measurement of the extent of harm may be difficult.

This reports analyses and provides measures on how victims and enablers of tax crimes can improve their resilience and protection in the field of tax crimes. It helps to improve the capacity of different categories of victims to protect themselves against being misused as enablers. Governments for instance (and their treasuries and other departments) suffer substantial losses through criminal activities that divert taxable income from legal taxation and are, therefore, considered as primary victims of tax crimes. Recommendations consider how to address dimensions of victimisation of governments and other victims such as the public and businesses. In various ways, victims can be protected, and their resilience built and increased through, among others, adequate legislation, heightened transparency, enhanced whistleblowing and cooperation.

As demonstrated by the PROTAX research, the significant development of cross-border trade generates significant opportunities for tax evaders, also as a result of the development of new technologies and e-commerce, coupled with weaknesses in the process of harmonisation of tax systems and transnational law enforcement. In other words, the significant vulnerabilities present in the system –translate into enabling opportunities for organised crime so that public authorities can be both victims and involuntary enablers of fraud. PROTAX research has also highlighted the role that private sector operators can play in enabling illegal behaviour or by failing to take appropriate preventive measures as provided for in legislation aimed at preventing VAT fraud or money laundering.

For the community of enablers, PROTAX research is expected to increase their resilience and awareness, helping them better detect and assess illegal activities and avoid being liable for the illegal behaviour of third parties, which now seems to be an increasingly pursued strategy within the EU. These enablers are advised how to proceed, react and inform others to take remedial actions.

key Findings

  • Different categories of victims such as States and businesses are always exposed to being misused as enablers of tax crimes by sophisticated methods and infrastructure of tax criminals – unless these victims are constantly made aware of these machinations while disabling measures are instituted and ritualised.
  • Victims should be given adequate support before, during and after investigations, court proceedings, or trial which will enable them to be able to cope with the psychological, practical and other constraints that come with testifying and supporting the criminal justice system to function effectively.
  • The law enforcement agencies (LEAs), tax administrations and Financial Intelligence Units (FIUs) must be adequately resourced to be able to give trusted process, infrastructure, financial, technological and human capital support to the individuals representing these agencies to pursue tax criminals.
  • A whole-system approach is recommended for public-private partnership engagement to generate common responses to tax crimes at the European level through a permanent forum of discussion between authorities and private sector operators to identify common vulnerabilities and develop common law enforcement strategies.
  • States should develop adequate incentives for reporting and whistleblowing, including financial rewards in order to discover tax crime cases, as much as possible.

Please note that the law cited were valid and correct at the time of the reports publication.