CURRENT PROBLEMS AND THE NEED FOR VAT REFORM IN THE EUROPEAN UNION

The introduction of VAT in the EU Member States was a part of the harmonization process of indirect taxation. Its aim was to create preconditions for the functioning of the EU single market. The application of VAT is accompanied by a number of problems that have been dealt with by a compromise combining two principles: principle by country of destination and principle by country of origin. In previous tax practice, the "weaknesses" of the VAT system have not been abolished to eliminate tax evasion and fraud. Implementation of the reform of VAT is an urgent task in European union. However, the question arises as to whether the weakest element of the VAT system - the institution of excessive VAT deduction and its abuse of fraud and leaks can be eliminated with the reform.