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EU urges member states to strengthen VAT collection after 168 mln euros lost

Xinhua, September 5, 2015 Adjust font size:

The European Union (EU) on Friday urged its member states to enhance value added tax (VAT) revenue collection as fresh official data showed the bloc lost as much as 168 million euros (187 U.S. dollars) on VAT in 2013.

"VAT revenue collection has failed to show significant improvement," said EU's executive body the European Commission (EC) in a report which provides estimates of the so-called "VAT gap" for 26 EU member states for 2013.

The "VAT gap" marks the overall difference between the expected VAT revenue and the amount actually collected. Based on the figures from 2013, the reading did not improve on 2012, the report said.

EU stood a minimum standard VAT rate of 15 percent, above which member states are free to set their own national VAT rates.

In 2013, 26 EU member states were expected to collect some 1.1 billion euros on VAT revenue but actually gained around 934 million euros, according to EC's report.

The amount of VAT lost is estimated at 168 billion euros, equating to 15.2 percent of the revenue, due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies and miscalculation, the report said.

"I urge member states to take the steps needed to fight tax evasion and tax fraud at all levels. This remains a burning issue and is at the top of this Commission's agenda," said Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs.

In 2013, member states' estimated VAT gaps ranged from the low of 4 percent in Finland, the Netherlands and Sweden, to the high of 41 percent in Romania.

A total of 15 member states decreased their VAT gap, with the largest improvements noted in Latvia, Malta and Slovakia. 11 member states saw an increase, generally of small magnitudes, with the largest deterioration in Estonia and Italy. Cyprus and Croatia were not yet included in calculation then. Endit