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No 28-2018, A. Szczypińska: VAT gap in the EU

 

The EU Member States face the problem of ineffective tax collection, especially in the case of VAT. It is a challenge to assess the scale of tax evasion which probably explains the lack of data published so far. This paper aims to identify determinants of VAT gap in the EU Member States based on a panel analysis. Effectiveness of tax system or macroeconomic condition may influence the size of VAT gap but do not explain this phenomenon comprehensively. The quality of institutions and social trust may also improve the effectiveness of tax collection. On the other hand, factors commonly considered as crucial in the VAT gap analyses did not confirm to be significant in the empirical research, e.g. number of VAT rates or their spread, which indicates no justification for the recommendation repeated for years that Poland should limit the use of  reduced VAT rates. The in-depth understanding of VAT gap mechanism allowes to choose proper policy tools to reduce the scale of this phenomenon. Systematic data collection, reliable research and interinstitutional cooperation in the area of tax fraud may significantly limit misbehaviours related to the tax law. Moreover, common cashless payments, electronic register of invoices and receipts as well as an increase in transparency of public institutions activities could substantially reduce the scale of VAT gap.

 

Materials

MF Working Papers No 28-2018
mf​_wp​_28.pdf 1.55MB
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Information on the publication of the document
First published on:
30.01.2019 15:24 Monika Błaszczyk
Written by:
Macroeconomic Policy Department
Title Version Edition / publication data
No 28-2018, A. Szczypińska: VAT gap in the EU 1.4 20.02.2019 14:04 Paulina Gronek
No 28-2018, A. Szczypińska: Luka VAT w UE 1.3 20.02.2019 13:53 Paulina Gronek
No 28-2018, A. Szczypińska: Luka VAT w UE 1.2 01.02.2019 13:03 Monika Błaszczyk
No 28-2018, A. Szczypińska: Luka VAT w UE 1.1 30.01.2019 15:55 Monika Błaszczyk
No 28-2018, Luka VAT w UE - Agnieszka Szczypińska 1.0 30.01.2019 15:24 Monika Błaszczyk

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