European Commission: Bulgaria had 625M euro ‘VAT Gap’ in 2017

European Commission: Bulgaria had 625M euro ‘VAT Gap’ in 2017

Bulgaria had a “VAT Gap” – the difference between expected VAT revenue and the amount actually collected – of 625 million euro in 2017, the European Commission said in a report released on September 5.

This meant that about 11.8 per cent of expected VAT revenue in Bulgaria “went missing” that year.

In 2016, the percentage was higher, at 12 per cent, though the sum itself was 603 million euro, according to the European Commission report.

The EC said that EU countries lost 137 billion euro in Value-Added Tax revenues in 2017,

The report said that the VAT Gap in the EU had reduced somewhat compared to previous years but remains very high, highlighting once more the need for comprehensive reform of the EU VAT rules, as proposed in 2017 by the Commission.

New rules would help clamp down on VAT fraud and improve the rules for legitimate businesses and traders, the EC said.

European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici said: “The favourable economic climate and some short-term policy solutions put in place by the EU helped to lower the VAT Gap in 2017.

“However, to achieve more meaningful progress we will need to see a thorough reform of the VAT system to make it more fraud-proof. Our proposals to introduce a definitive and business-friendly VAT system remain on the table. Member States cannot afford to stand by while billions are lost to illegal VAT carousel fraud and inconsistencies in the system.”.

Romania recorded the largest national VAT Gap with 36 per cent of VAT revenues going missing in 2017. This was followed by Greece (34 per cent) and Lithuania (25 per cent).

The smallest gaps were in Sweden, Luxembourg and Cyprus where only one per cent of VAT revenues on average fell by the wayside.

In absolute terms, the highest VAT Gap of around 33.5 billion euro was in Italy.

The VAT Gap measures the effectiveness of VAT enforcement and compliance measures in each member state, as it provides an estimate of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies as well as miscalculations, the EC said./ibna