Slovakia keeps narrowing its VAT Gap

It still lost €1.872 billion in VAT revenues in 2016, based on the latest report.

(Source: Sme)

The VAT Gap in Slovakia continued its downward trend. Since 2012, the VAT Gap, which shows the difference between the expected VAT revenue and the amount actually collected, has fallen in Slovakia by 11 percentage points from 37 percent to 26 percent in 2016. Nevertheless, Slovakia still lost €1.872 billion in VAT revenues in 2016, based on a study the European Commission published on September 21. This means that while the basic VAT in Slovakia was 20 percent and the reduced one 10 percent, the effective rate was 16.1 percent in 2016.

EU countries lost almost €150 billion in value-added tax (VAT) revenues in 2016, according to the study.

Read also:Slovakia is fourth worst in collection of VAT in EU Read more 

Economic Affairs Commissioner Pierre Moscovici commended EU Member States for improving VAT collection throughout the EU.

“But a loss of €150 billion per year for national budgets remains unacceptable, especially when €50 billion of this is lining the pockets of criminals, fraudsters and probably even terrorists,” Moscovici said, as cited in the press release.

While member states have carried out a lot of work to improve VAT collection, the latest figures show that reform of the current EU VAT system, combined with better cooperation at EU level, are needed so that member states can make full use of VAT revenues in their budgets, reads the EC press release.

In nominal terms, the VAT Gap decreased by €10.5 billion to €147.1 billion in 2016, a drop to 12.3 percent of total VAT revenues compared to 13.2 percent the year before.

The individual performance of the member states still varies significantly. The VAT Gap decreased in 22 member states with Bulgaria, Latvia, Cyprus, and the Netherlands displaying strong performances, with decreases of more than 5 percentage points in VAT losses.

However, the VAT Gap did increase in six member states: Romania, Finland, the UK, Ireland, Estonia, and France, the EC wrote in its press release.

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