Brussels, Sep 7 (IANS) A study funded by the European Commission showed that about 159.5 billion euros (about $179 billion) in Value Added Tax (VAT) revenues were lost across the European Union (EU) in 2014.
The overall difference between the expected VAT revenue and the amount actually collected (the so-called ‘VAT Gap’) amounted once again to a high yearly figure, according to figures released by the European Commission on Tuesday.
The VAT Gap rate ranged from a high of 37.9 per cent of uncollected VAT in Romania to a low of only 1.2 per cent in Sweden. In absolute terms, the highest VAT Gap of 36.9 billion euros was recorded in Italy while Luxembourg had the lowest: 147 million euros, Xinhua news agency reported.
Compared to 2013, the 2014 VAT GAP has decreased by 2.5 billion euros, but individual performances of member states still vary enormously when it comes to VAT compliance.
“Today’s report is evidence that while some member states have improved their VAT revenue collection, substantial progress can only be achieved if member states agree to make the current EU VAT system simpler, more fraud-proof, and business-friendly,” according to a Commission press release on Tuesday.
The VAT Gap study was part of the Commission’s work to reform the VAT system in Europe and to clamp down on tax fraud and evasion.
The Commission adopted the action plan on VAT in 2016. The plan describes the necessary steps that need to be taken towards a single EU VAT area, and how to adapt the VAT system to the realities of the internal market, the digital economy, and the needs of SME’s.
The Commission will table legislative proposals in 2017 to re-establish the principle of charging VAT on cross-border trade within the EU.