Romania posted the highest VAT gap in the European Union in 2016, of 35.88%, according to the study.
It’s concerning that the VAT gap grew in 2016 compared with 2015 in Romania, while most member states registered decreases. Although Romania lowered its standard VAT rate in 2016 from 24% to 20%, non-payment increased, PwC Romania said in a press release Monday.
The VAT gap, which is the difference between expected VAT revenues and VAT actually collected, provides an estimate of revenue loss due to tax fraud, tax evasion and tax avoidance, but also due to bankruptcies, financial insolvencies or miscalculations.
The total amount of VAT lost across the EU in 2016 is estimated at EUR147.1 billion. This represents a loss of 12.3% of the total expected VAT revenue.