Uncollected VAT is costing the Romanian state budget over EUR 8.3 bln

The cost of uncollected VAT to the state budgets of five Central and Eastern European (CEE) countries amounted to over EUR 28.2 billion in 2015, according to PwC estimations. The results of this study were presented on Thursday at a PwC conference held in Bucharest, Romania, dedicated to combating VAT tax evasion in CEE.

The five CEE countries (Czech Republic, Hungary, Poland, Romania and Slovakia) are faced with high levels of VAT gap (the difference between the VAT revenues that the state budgets should collect and actual VAT revenues), ranging from 19.6 percent in the Czech Republic, to 39.6 percent in Romania.

In the other CEE countries, the level of the VAT gap was 20.5 percent in Hungary, 28.3 percent in Slovakia and 29.2 percent in Poland.

Regarding the revenues, that means a gap of EUR 3.1 billion for the Czech Republic, EUR 2.6 billion for Hungary, EUR 8.3 billion for Romania, EUR 12 billion for Poland and EUR 2.2 billion for Slovakia.

“In recent years, the CEE countries have introduced programmes for tax administration reform and modernisation. Such programmes have already delivered spectacular results in Slovakia, where the VAT gap was reduced from 33.9 percent to 28.3 percent in just one year,” said Daniel Anghel, PwC CEE Indirect Taxes Leader.

“Yet, other countries seem to lag behind in terms of reducing their VAT gap problem. Both Poland and Romania are reporting high levels of uncollected VAT in 2015, with Romania being last among the EU member states in terms of VAT collection. It is clear that authorities in these countries need to reasses the impact of the measures undertaken, including the additional checks on VAT registration, such as the 088 VAT form in Romania, that prove to be burdensome for honest businesses, but do not seem to bring the desired outcome in terms of reducing VAT fraud and increasing tax collection,” added Anghel.

Georgiana Bendre