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Japan's consumption lax (CTAX) is a low, single, flat rate applied to a broad base, with few exemptions and no zero-rated goods.
An Irish Customs source said: "We know the country is being used as a source of zero-rated goods.
Carouselling involves selling on the zero-rated goods through a series of UK companies, all liable to VAT at the standard rate, before exporting them back to Europe at zero-rate again.
Sellers of zero-rated goods or services do not collect or remit any VAT on the sales of those items, though they would be allowed to claim credits and potential refunds for the VAT they pay on purchased goods and services.
Taxpayers who consume zero-rated goods or services must continue to register with the tax authority and file a return.
This method, however, would be difficult to administer if Congress created many different tax rates and exempted or zero-rated goods or businesses.
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