Staikouras: Greece has the 4th largest VAT deficit reduction in the EU

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Another development, which certifies the effectiveness of the economic and tax policy implemented in recent years, says Mr. Staikouras

Finance Minister Christos Staikouras appeared particularly satisfied with the Commission’s report, which shows that Greece recorded one of the largest reductions in the VAT deficit in the European Union for 2020.

As the Minister of Finance typically mentions in his statement, “the European Commission published today the 10th Report on the VAT gap or the so-called VAT gap, i.e. the difference between the expected and actual revenues from the Value Added Tax (VAT). According to the Report, in 2020, despite the onset of the pandemic and its effect on the economic cycle, which also affects VAT, Greece achieved one of the largest VAT deficit reductions in the European Union, significantly limiting its revenue losses, mainly due to tax evasion. A trend that is expected to continue at a faster pace in 2021.”

The announcement also states:

This is an important development, with a direct and substantial impact on government revenues, on strengthening tax awareness, on increasing the competitiveness of businesses, on strengthening tax justice and social cohesion and above all, on ensuring the conditions for an even lower overall tax burden the citizens.

Another development, which certifies the effectiveness of the economic and tax policy implemented in recent years, demonstrating the significant progress recorded – under unfavorable international conditions – by our country, in the improvement of important indicators of its economy.

In particular, according to the European Commission Report:

Greece is the country with the 4th largest VAT deficit reduction in the European Union in 2020.

Greece shows a reduction in the VAT deficit by 3.7 percentage points, i.e. to 19.7% of VTTL (theoretical expected revenue under full compliance) in 2020, compared to 23.4% in 2019, despite the reduction in GDP and the implementation of reduced and over-reduced rates and exemptions (policy gap) in important sectors also due to the pandemic. Therefore, this very important reduction comes mainly from the substantial increase in compliance, due to the reduction of tax rates by the Government, from 2019.

The VAT deficit in Greece is expected to continue to decrease at a higher rate, of the order of 5.7 percentage points, in 2021 mainly due to increased compliance.

The non-compliance gap decreased by 5.1 percentage points, given the intensification of measures to fight tax evasion and the strengthening of compliance. It is important to emphasize that the increase in the gap due to the application of reduced coefficients was completely absorbed by the aforementioned reduction in the gap due to non-compliance.

It therefore proves that the Government’s efforts to combat tax evasion, digitize the economy, intensify controls and promote electronic transactions, combined with the significant reductions in taxes and social security contributions, are bearing fruit.

Tax compliance is increasing.

The VAT gap is shrinking.

Whereas, the European Commission recognizes the substantial, non-contemporary, progress that has been achieved in strengthening the effectiveness of the VAT system.

The Government and the Ministry of Finance are moving forward with a plan and vision, implementing appropriate policies, with the aim of addressing chronic endogenous weaknesses of the Greek economy, expanding the production base, increasing the quantity and improving the quality of the domestic product, in order to achieve the improving the disposable income of households and businesses, the creation of quality jobs and the strengthening of social cohesion”.

RES-EMP

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