LONDON (Reuters) - EU member states provisionally approved new reporting rules for card companies on Friday to combat value added tax (VAT) fraud in cross-border e-commerce.
The Council of the European Union, which represents the bloc's 28 member states, said the new rules will enable countries to collect in a harmonised way electronic records from payments companies like banks that operate credit and debit cards used to buy goods online.
A new central electronic system will be set up to store the data for national anti-fraud officials to use in investigations.
"By harmonising the way to collect and access this information, member states will have a powerful tool to control whether VAT rules are correctly applied, especially in the area of cross-border e-commerce," said Mika Lintila, finance minister for current EU presidency Finland.
But four of Europe's banking industry trade bodies said they were concerned about the feasibility and effectiveness of the new rules and that they were not a proportionate or effective way to gather data.
The European Payment Institutions Federation, the European Banking Federation, the European Savings and Retail Banking Group, and the European Association of Co-operative Banks called for a new joint EU-industry group to ensure the new reporting system won't be an undue burden in practice.
Last month the four said it was unclear how data will be reported, and companies that commit fraud can simply keep transactions within one country to avoid triggering the cross-border reporting requirements at payments company.
The Council expects to approve the new rules in full once they have undergone a review by lawyers.
(Reporting by Huw Jones; Editing by Susan Fenton)
