VAT gap determinants in the European Union and Poland

Abstract

Motivation: VAT revenues constitute a significant part of the budgets of EU countries and Poland. Both the EU and Poland are taking steps to reduce the VAT gap. To define the areas influencing the size of the VAT gap, its determinants should be indicated.
 Aim: The study aims to identify the determinants of the VAT gap in the EU and Poland. By comparing the impact of individual determinants on the VAT Gap in the EU and Poland, it will be possible to identify common factors shaping the VAT gap in the EU and Poland.
 Results: Based on the econometric study, it was indicated that growth, trade, consumption, and corruption are significant determinants of the VAT gap in the EU and Poland. However, it has been shown that the impact of consumption and corruption on the VAT gap in Poland is different from that in the EU.

The determinants of compliance VAT gap

“…Majerová (2016) also validates that economic and financial crime phenomena influence VAT gaps and the larger the financial crime dimension is, be it corruption, SE, money laundering or cyber crime, the higher the fiscal frauds are and thus VAT gap levels are. These findings resonate to those of Pluskota (2022) and even Alognon et al . (2020), that uses the dimension of cash economy, an indicator of potential shadow activities.…”

“…Then, Alognon et al (2020) investigated the VAT gap as a function of card payments (inverse relation) and as a function of cash withdrawals (direct relation), for EU Countries, for the 2000-2016 time period. Pluskota (2022) validates several VAT Gap determinants in the EU and Poland, such as growth, with a negative impact, trade with a negative impact as well, consumption, having the peculiarity of a positive impact in the case of Poland, but negative for the EU countries, and corruption, with a positive impact for Poland, but negative for the EU countries. Pluskota (2022) uses data for the period from 2000 to 2018 for 26 EU countries, including Poland.…”

“…Pluskota (2022) validates several VAT Gap determinants in the EU and Poland, such as growth, with a negative impact, trade with a negative impact as well, consumption, having the peculiarity of a positive impact in the case of Poland, but negative for the EU countries, and corruption, with a positive impact for Poland, but negative for the EU countries. Pluskota (2022) uses data for the period from 2000 to 2018 for 26 EU countries, including Poland. Thus, the need to investigate the peculiarities of EU member states not necessarily as a whole, but at a smaller scale.…”

“…This proxy is often used as a reflection of ongoing financial and economic crime phenomena. Various studies from the specialized literature cited before document that the relationship between financial and economic crime and compliance VAT gap may be moderated by various control variables such as the level of economic development (Zídková, 2014; Majerová, 2016; Achim and Borlea, 2020; Pluskota, 2022; Kelm, 2022), institutional quality (Butu and Brezeanu, 2021; Olexová et al ., 2022), final consumption (Zídková, 2014; Zídková and Pavel, 2016; Pluskota, 2022), VAT revenues (Carfora et al. , 2020), standard VAT rates (Zídková and Pavel, 2016; Majerová, 2016), difference between the VAT rates (Zídková and Pavel, 2016) and even the number of VAT rates (Zídková, 2014).…”

Modelling the Impact of VAT Fiscality on Branch-Level Performance in the Construction Industry—Evidence from Romania

“…At the European level, strategic directions mandate measures to reduce taxation and enhance tax collection. By contrasting the effects of various factors on tax collection in the EU and Poland, Pluskota (2022) aimed to determine the influencing factors. The conclusions indicate that although consumption and corruption have a different effect on tax collection in Poland compared to the EU, growth, trade, consumption, and corruption are all significant factors affecting collection in both the EU and Poland.…”