VAT fraud: Romania has lost over EUR 8 bn last year, PwC study shows

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Romania, along with other Central and Eastern European (CEE) countries, has faced with a high level of VAT Gap (the difference between the VAT revenues that the state budgets should collect and actual VAT revenues) in 2015, 39.6 percent respectively, according to a recent PwC study presented Thursday in conference held in Bucharest and dedicated to combating VAT tax evasion in CEE.

Thus, the level of the VAT Gap was 20.5 percent in Hungary, 28.3 percent in Slovakia, 29.2 percent in Poland and 19.6 percent in the Czech Republic.

In terms of 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.

According to PwC estimations, the cost of uncollected VAT to the state budgets of five CEE countries amounted to over EUR 28.2 billion in 2015.

“Both Poland and Romania are reporting high levels of uncollected VAT in 2015, with Romania being last amongst the EU member states in terms of VAT collection.Daniel Anghel It is clear that authorities in these countries need to reassess 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”, Daniel Anghel, PwC CEE Indirect Taxes Leader, stated.

In a recent study the European Commission concluded that the more complex a VAT return is the higher the VAT gap, which seems to suggest that national approaches based on complex VAT reporting declarations are not very effective.

“As the problem of the VAT gap impacts all the CEE countries, it is paramount for the states in the region to tackle the issue of VAT fraud in a joint, coherent and coordinated manner, with Romania aligning its actions to those of the Visegrad 4 group”, Daniel Anghel concluded.

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