«VAT Gap» in Latvia at 23%

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Compared to the EU average of 14%, Latvia's "VAT Gap" - the difference between the collected value-added tax and the amount that theoretically could be collected - was 23% in 2014, reported Rus.lsm.lv Tuesday. 

That is according to a European Commission report on the collection of the value-added tax in EU countries published Tuesday.

Countries like Sweden (1.1%) and Luxembourg (3.8%) and Finland (6.9%) had the smallest VAT Gap in the EU, while Romania (37.9%), Lithuania (35.9%) and Malta (35.3%) fared the worst. 

The Commission puts Latvia's VAT gap at €547m for 2014. However the situation has improved over 2011 when the gap was 37% or €792m.

The VAT gap springs up not only due to non-payment of taxes, according to the Commission. "The VAT Gap measured in this report is a conceptually simple indicator of VAT non-compliance, but also includes VAT lost due to, for example, insolvencies, bankruptcies, administrative errors, and legal tax optimisation," said the report.

The EU average difference between how much VAT was collected and what could be was estimated to be 14% or €159.5b.

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