VAT gap in Romania drops, but still among highest in the region

Romania’s VAT gap dropped to 39.6% last year from 44.4% in 2014, according to a report by PwC Romania. However, it remained the highest among the five countries analyzed in the report, namely the Czech Republic, Hungary, Poland, Romania, and Slovakia. The VAT gap is the difference between the VAT revenues that the state budget should collect and the actual VAT revenues. The cost of uncollected VAT to the state budget in Romania amounts to EUR 8.3 billion, according to PwC. The VAT gap in Romania went down due to the cut in the VAT rate on food from June 1, last year. Other factors contributing to a lower VAT gap included the tax receipt lottery and capping cash payments, according to the report. All the analyzed countries, except for Poland, saw improvements in reducing their VAT gap. However, the amounts lost from failing to collect the VAT totaled EUR 28 billion in the five countries last year. The VAT gap levels varied from 19.6% in the Czech Republic to 39.6% in Romania. editor@romania-insider.com