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CEE Countries Must Intensify Their Exchange of Best Practices to Successfully Combat VAT Fraud

Date: 11/19/2015
Source: PwC

Officials from the ministries of finance and economy of five CEE countries (Czech Republic, Hungary, Poland, Romania and Slovakia) have called for a joint approch to combat VAT fraud and increase VAT collection in a conference hosted today by PwC in Budapest.

According to the EU Commission data, the EU Member States from Central and Eastern Europe have among the highest levels of VAT Gap (the difference between the VAT revenues that the state budgets should collect and actual VAT revenues) – ranging from 22.4% in the Czech Republic, to 41.1% in Romania. The other three CEE countries represented at the conference also have high levels of VAT Gap – Hungary (24.4%), Poland (26.7%) and Slovakia (34.9%).

In recent years, tax administration reform and modernisation programmes have been initiated by several CEE countries (e.g. Romania, Slovakia, Poland) in an attempt to reduce the VAT Gap.

“This common problem througout the region is costing the state budgets of our five CEE countries around 27 billion Euro annually. To put it into perspective, that’s substantially higher than Slovakia’s overall tax revenues per year (21.8 bn Euro in 2013, according to OECD data). In today’s globalized economy, where tax evaders can easily switch countries of residence in order to take advantage of loopholes in the tax legislation, it is paramount for the CEE countries to tackle the issue of VAT fraud in a joint, coherent and coordinated manner. Thus, CEE countries should intensify their exchange of best practices and work together to successfully combat VAT fraud and reduce the VAT Gap. In addition to benefitting governments, a reduction of the VAT fraud would also benefit the business environment by diminishing hidden VAT costs and eliminating unfair tax competition”, stated Daniel Anghel, PwC CEE Indirect Tax Leader.

PwC’s CEE VAT Anti-Fraud Conference, organised in partnership with the Slovak-Hungarian Chamber of Commerce, featured the participation of Mihaly Varga, the Hungarian Minister of the Economy and Andrej Babiš, Minister of Finance of the Czech Republic. During the panel discussion, other officials from the ministries of finance and economy participated, namely: Blanka Mattauschová, Director of the Indirect Taxes Department, General Financial Directorate, Czech Republic; Mariana Vizoli, General Deputy Director, Head of the Indirect Tax Unit from the Romanian Ministry of Finance; Dan Voicu, General Deputy Director, General Information Direction, Romanian National Fiscal Administration, Ondrej Jendrol, Director, Antifraud Department of the Slovak Tax Directorate, and Mariana Csomova, Deputy Director, Antifraud Department of the Slovak Tax Directorate.

“We have recently seen that VAT fraud patterns used in the past in Western European countries are replicated in CEE. Carousel fraud and missing trader fraud were identified in CEE in areas such as: scrap metal, food and agriculture industries, textiles, IT components, mobile phone, real estate and retail trade. That’s why at today’s conference we presented the experience of various CEE EU Member States in dealing with tax evaders and what sort of legislative and administrative measures worked best in combating VAT evasion and increasing VAT collection”, added Daniel Anghel.


About PwC:

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC has been active in Central and Eastern Europe for the past 25 years. Today, we have more than 8,800 people working in 56 offices across 29 countries in the region to help our clients in local markets become more successful and globally competitive.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

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