Study to Quantify and Analyse the VAT Gap in the EU Member States

Barbone, Luca; Bonch-Osmolovskiy, Mikhail; Poniatowski, Grzegorz

doi:10.2139/ssrn.2693524

Cited by 17 publications

(12 citation statements)

References 5 publications

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“…VAT gap was computed by Reckon who compared actual VAT receipts with theoretical net VAT liability (Reckon 2009). The VAT gap includes VAT fraud and the revenue losses determined by tax avoidance schemes or insolvencies.…”

Section: Literature Surveymentioning

confidence: 99%

The Impact of Standard Value Added Tax on Economic Growth in Cee-5 Countries: Econometric Analysis and Simulations

Simionescu

Albu

2016

Technological and Economic Development of Economy

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The value added tax (VAT), as an instrument of fiscal policy, might have an important role on economic growth. This study analyzes the impact of standard VAT rate on economic growth in five Central and Eastern European countries (CEE-5) (Bulgaria, Czech Republic, Hungary, Poland and Romania). Different types of panel data models (random effect model, dynamic panel and panel vector-autoregression) over 1995–2015 indicated a positive influence of VAT rate on economic growth. There is a bilateral Granger causality between economic growth and VAT rate. The Bayesian linear models indicate a positive effect of VAT rate on GDP rate only for Hungary. On short-run, the other countries register lower GDP rates when VAT rates increase. Some simulations of economic growth for 2016 and 2018 were made for each CEE-5 country under different assumptions regarding VAT rate values.

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Section: Literature Surveymentioning

confidence: 99%

The Impact of Standard Value Added Tax on Economic Growth in Cee-5 Countries: Econometric Analysis and Simulations

Simionescu

Albu

2016

Technological and Economic Development of Economy

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“…VAT is implemented at the stage of production and distribution to increase the inland revenue. The noncompliance of VAT implementation results in the VAT gap [5] that represents the difference between estimated tax and actual tax collected. There are a number of reasons for the VAT gap which may include envision, fraud, bankruptcies, and insolvencies relating finance, etc [6].…”

Section: Introductionmentioning

confidence: 99%

A Blockchain-based Value Added Tax (VAT) System: Saudi Arabia as a Use-Case

Alkhodre¹,

Syed²,

Jan³

et al. 2019

IJACSA

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Businesses need trust to confidently perform trade among each other. Centralized business models are the only mature solutions available to perform trades over the Internet. However, they have many problems which includes but are not limited to the fact that these create bottleneck on the server as well as requires trusted third parties. Recently, decentralized solutions have gained significant popularity and acceptance for future businesses. The wide acceptance of such systems is indeed due to the trust management among various untrusted business stakeholders. Many solutions have been proposed in this regard to provide decentralized infrastructure for various business models. A standard solution that is acceptable to the industry is still in demand. Hyperledger umbrella Blockchain projects, that are supported by IBM and many other industry big players are gaining popularity due to its efficient and pluggable design. In this study, the author present the idea of utilizing Blockchain to design a Value-Added Tax (VAT) system for Saudi Arabia's newly introduced tax system. The reason to select this business model for VAT is twofold. First, it provides an untampered distributed ledger, which cannot be deceived by any party. Each transaction in the system cannot go unnoticed by the smart contract. Secondly, it provides a transparent record, and updates all involved parties regarding each activity performed by stakeholders. The newly proposed system will provide a transparent database of VAT transactions according to our smart contract design and at each stage of supply chain, tax will be deducted and stored on peer-to-peer network via consensus process. The author believes that the proposed solution will have significant impact on VAT collection in the Kingdom of Saudi Arabia.

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“…All European countries rely on value-added tax (VAT) as the main source of government revenue (Barbone et al, 2015). The capability to generate significant amounts for the national budget is a positive aspect of the VAT, with about one-fifth of all tax revenues being collected as part of this tax globally (Borseli, 2011).…”

Section: Introductionmentioning

confidence: 99%

“…Pursuant to legal regulations, it is mandatory for entrepreneurs to keep current accounting records and subsequently, in the disclosure of financial statements, to provide a true and fair account of facts that are subject to accounting requirements (Ferenczi Vaňová et al 2015). Slovak Republic belongs to the group of European Union (EU) countries with high VAT gaps, being in the fifth quintile of the EU-26 states with its average gap for 2000-2011 amounting to 29% (Barbone, et al, 2015). The important anti-fraud measure currently specified in this proposal is the reverse-charge mechanism.…”

Section: Introductionmentioning

confidence: 99%

Impact of the Vat Reverse-Charge Mechanism on the Cash Flows of Construction Companies in the Slovak Republic

Kútna

Gyurián

Šeben

2018

CBUP

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In 2015, the Slovak Parliament adopted the Law on Amendments to the Law on Value-Added Tax. This law came into force on January 1, 2016. One of the most significant changes was the introduction of a reverse-charge for the provision of construction works. A government statement of its positive influence on the business environment is inconsistent with the two-year experience in the building sector. The main goal of this paper is to establish the reason for the practical effects of the value-added tax reverse-charge mechanism on the construction companies. The hypothesis is that the negative effect on the cash flows of the construction companies increases ‘opportunity costs’ connected to excessive deductions. The paper focuses on evaluating and quantifying such an effect. It presents a comparison of the conditions before and after the adoption of the Act. No. 222/2004 Coll., as amended in 2016 and includes factors that influence costs and cash flows of construction companies. It but does not consider factors related to turnover and the economic situation. The reverse-charge mechanism affects the total of tax owing, the total deductible tax, the total excessive deduction, and the construction companies’ cash flows. In this study, the data from the information system of the Slovak Republic, under the condition of anonymity, are analyzed for the period 2014–2017. The effect of the value-added tax is quantified by way of financial interest expenses. These expenses depend on time limits for the excessive deduction, total of tax owing, and on the excessive deduction amount. Indicators of ‘Financial Burden 1’ and ‘Financial Burden 2’ are calculated. The results show that the Law on Amendments of Value Added Tax has significantly affected the constructions companies since January 2016. The reverse-charge system has not changed the delay in excessive deduction payments to the taxpayer’s bank account. It has changed the amount of excessive deduction expressed through money and the total tax owing. Based on the study results, this change markedly affects the financial burden of construction companies and provides an ‘opportunity cost’ Value Added Tax payers‘ construction company.

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Study to Quantify and Analyse the VAT Gap in the EU Member States

Cited by 17 publications

References 5 publications

The Impact of Standard Value Added Tax on Economic Growth in Cee-5 Countries: Econometric Analysis and Simulations

The Impact of Standard Value Added Tax on Economic Growth in Cee-5 Countries: Econometric Analysis and Simulations

A Blockchain-based Value Added Tax (VAT) System: Saudi Arabia as a Use-Case

Impact of the Vat Reverse-Charge Mechanism on the Cash Flows of Construction Companies in the Slovak Republic

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