VAT fraud in selected European Union Countries and its possible macroeconomic implications

Abstract

Effective tax management requires a risk-based approach, particularly in area of VAT collection-which is very fraud prone. There are several factors that can decrease this risk. These are: a less liberal approach to tax collection (which obviously harms legally behaving taxpayers), higher efficiency of the revenue administration, higher efficiency of the criminal justice system, data openness and transparency, the ability of performing deep level analytics on big data spanning many areas, and the power to restrain organized crime groups. VAT-collection efficiency measures are particularly low in a number of the EU new member states, including most of the Visegrad group, and Greece, as well as Italy. While Slovakia and the Czech Republic, have recovered to pre-crisis collection levels in GDP (Gross Domestic Product) terms, the weak performance of Poland contrasts with other countries in Europe. This can be attributed to severe shortcomings of the Polish administration, particularly in the area of IT analytic support. The scale of VAT fraud in Poland is so large that it affects balance of payments statistics, and possibly also national accounts. This situation calls for diminishing a research gap produced by insufficient studies devoted to analysis of revenue data and the blocking of access to inconvenient data by public administrations.