It is essential to reduce tax gaps, especially those related to compliance, concluded the European Commission in its Mind The Gap report, published on Thursday 11 December. It considers that this must be a priority in order to collect the hundreds of billions of euros in revenue that EU Member States lose every year.
Tax gaps represent the difference between the amount of tax that could theoretically be collected and the amount actually collected. The value added tax (VAT) compliance gap has risen to 9.5% of gross domestic product (GDP), or €128 billion in 2023. Significant losses also stem from corporate income tax (CIT) and personal income tax (PIT) gaps, with the average CIT gap close to 11%. The shadow economy accounted for around 17.6% of GDP.
While Member States have made progress in recent years, substantial efforts are still required. The Commission notes that “a better assessment of tax gaps and how to close them can inform and support key policy priorities”.
In addition, “investing in more effective tax collection and tax recovery can help reduce the tax compliance gap”. The digital transformation of the tax authorities can still be accelerated.
“However, citizen satisfaction with the support provided and the perceived ease of filing tax returns remain moderate, indicating that technology alone does not guarantee a better user experience”, it added.
To read the report: https://aeur.eu/f/jxy (Original version in French by Anne Damiani)