"VAT gap" estimation distinguishing between informality and fraud Dominik J. Gajewski & Kamil Jonski
By: Gajewski, Dominik J
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Contributor(s): Jonski, Kamil.
Material type: 
ArticleSubject(s): IMPUESTO SOBRE EL VALOR AÑADIDO | ESTIMACION OBJETIVA | CUMPLIMIENTO FISCAL | FRAUDE FISCAL | UNION EUROPEA
In:
EC Tax Review v. 31, n. 3, June 2022, p. 124-130Summary: The value added tax (VAT) remains a primary source of budget revenues across Europe. Consequently, compliance with it became critical for the fiscal security of Member States. Hence, the issue of VAT compliance received EU level attention, and quantitative indicators – known as ‘VAT gaps’ – were produced for particular countries and the entire EU. Unfortunately, the most common top-down approach to the ‘VAT gap’ calculation delivers only the aggregate estimate of non-compliance. However, designing effective policy interventions requires a more detailed diagnosis as countering organized crime VAT fraud schemes requires different strategies than the shadow economy. This article proposes a simple approach to the top-down ‘VAT gap’ estimation that would enable distinguishing between the two categories by building upon the minimal set of data available to the tax authorities. An analysis of the Polish ‘VAT gap’ experience confirms the validity of the proposed method, facilitating its application in a study encompassing multiple countries.
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| Artículos | IEF | IEF | OP 2141-B/2022/3-3 (Browse shelf) | Available | OP 2141-B/2022/3-3 |
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| OP 2141-B/2022/3 EC Tax Review | OP 2141-B/2022/3-1 Should we cut "final" losses? | OP 2141-B/2022/3-2 The shortcomings of the EU Public Country-by-Country Reporting Directive | OP 2141-B/2022/3-3 "VAT gap" estimation | OP 2141-B/2022/3-4 BEFIT and formulary apportionment | OP 2141-B/2022/3-5 Blocking the gap | OP 2141-B/2022/3-6 Disproportionate taxation and the right to property |
Resumen.
The value added tax (VAT) remains a primary source of budget revenues across Europe. Consequently, compliance with it became critical for the fiscal security of Member States. Hence, the issue of VAT compliance received EU level attention, and quantitative indicators – known as ‘VAT gaps’ – were produced for particular countries and the entire EU. Unfortunately, the most common top-down approach to the ‘VAT gap’ calculation delivers only the aggregate estimate of non-compliance. However, designing effective policy interventions requires a more detailed diagnosis as countering organized crime VAT fraud schemes requires different strategies than the shadow economy. This article proposes a simple approach to the top-down ‘VAT gap’ estimation that would enable distinguishing between the two categories by building upon the minimal set of data available to the tax authorities. An analysis of the Polish ‘VAT gap’ experience confirms the validity of the proposed method, facilitating its application in a study encompassing multiple countries.
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