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Slovakia lags in VAT collection

THE LOSS in revenues from value-added tax (VAT) represented €2.3 billion, i.e. 3.5 percent of GDP in 2010. Half of this money was lost through the level of efficiency in collecting taxes being lower than the European Union average, the TASR newswire reported.

THE LOSS in revenues from value-added tax (VAT) represented €2.3 billion, i.e. 3.5 percent of GDP in 2010. Half of this money was lost through the level of efficiency in collecting taxes being lower than the European Union average, the TASR newswire reported.

Compared to previous years, the Institute of Financial Policy (IFP) registered a slight increase in the loss of state income from VAT. Between the years 2000 and 2005 the loss consistently represented 18 percent of the sum which the state should have collected. Since then the loss has been gradually increasing, and hit the level of 35.9 percent in 2010, according to IFP.

The effectiveness of tax collection has also dropped in comparison with other EU countries.
The difference between Slovakia and the EU average has increased by approximately 1.2 percent to 1.6 percent of GDP, TASR wrote.

“In other words, if we were reaching the same level of effectiveness in [tax] collection as in other EU member states, the basic VAT rate could have been 4.7 percentage points lower, while maintaining the current revenues from VAT,” said IFP representatives, as quoted by TASR.

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