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19.16.    Fictitious trade. While smuggling reduces the coverage of trade statistics, other fraudulent activities can artificially inflate recorded trade. The case of the declaration of a trade value too high for exports, e.g., to receive a subsidy, raises a valuation issue (see chap. XIV) and a matter of statistical quality assurance (see chap. IX). However, in some cases (for instance, in the so-called carousel fraud in the European Union), a series of trade transactions of significant value is created to enable value added tax fraud to be committed without the goods necessarily ever moving.[14] It is good practice for compilersto  stay in close contact with the responsible tax and customs authorities in order to properly remove such fictitious trade transactions, once identified, from the data.

 


[14] European Commission, “VAT fraud: frequently asked questions”, press release (MEMO/01/230), Brussels, 19 June 2001.