VAT efficiency in the EU

Thesis title: VAT efficiency in the EU
Author: Kobalava, Tamar
Thesis type: Diploma thesis
Supervisor: Zídková, Hana
Opponents: Klazar, Stanislav
Thesis language: English
Abstract:
This thesis focuses on assessing the efficiency of the Value Added Tax (VAT) system in the European Union (EU), a crucial revenue source for many countries. The research uses the C-efficiency ratio, decomposed into Policy gap and Compliance gap, to identify trends and differences in VAT Efficiency indicators between higher developed and lower developed economies in the EU. Surprisingly, lower developed economies exhibit higher C-efficiency rates. Higher developed economies show almost three times higher Policy gaps than Compliance gaps, indicating potential revenue loss. On the other hand, lower developed economies display higher Compliance gaps, suggesting tax evasion and poor administration, although with decreasing trends for the past couple of years due to the successful implementation of VAT listings. The C-efficiency was decreased by the financial crisis and the Covid-19 pandemic in both groups. During the financial crisis, the Compliance gap increased in both groups. In contrast, the Covid-19 pandemic affected the VAT efficiency of both groups by increasing the Policy gap due to temporarily reduced VAT rates. On the other hand, Compliance gaps showed unusual phenomena during the Covid-19 pandemic, such as a decrease during the economic shock, due to temporary changes in tax rates, increased electronic transactions, and changes in financial consumption structure. The study concludes that higher developed economies are mostly more resilient to economic shocks but generally face challenges related to policy gaps. In contrast, lower developed economies struggle with Compliance gaps, although with decreasing tendencies during the last years.
Keywords: VAT system; VAT; C-efficiency; Policy gap; Lower developed economies; Financial crisis; Covid-19; Compliance gap; Higher developed economies
Thesis title: VAT Efficiency in the EU
Author: Kobalava, Tamar
Thesis type: Diplomová práce
Supervisor: Zídková, Hana
Opponents: Klazar, Stanislav
Thesis language: English
Abstract:
This thesis focuses on assessing the efficiency of the Value Added Tax (VAT) system in the European Union (EU), a crucial revenue source for many countries. The research uses the C-efficiency ratio, decomposed into Policy gap and Compliance gap, to identify trends and differences in VAT Efficiency indicators between higher developed and lower developed economies in the EU. Surprisingly, lower developed economies exhibit higher C-efficiency rates. Higher developed economies show almost three times higher Policy gaps than Compliance gaps, indicating potential revenue loss. On the other hand, lower developed economies display higher Compliance gaps, suggesting tax evasion and poor administration, although with decreasing trends for the past couple of years due to the successful implementation of VAT listings. The C-efficiency was decreased by the financial crisis and the Covid-19 pandemic in both groups. During the financial crisis, the Compliance gap increased in both groups. In contrast, the Covid-19 pandemic affected the VAT efficiency of both groups by increasing the Policy gap due to temporarily reduced VAT rates. On the other hand, Compliance gaps showed unusual phenomena during the Covid-19 pandemic, such as a decrease during the economic shock, due to temporary changes in tax rates, increased electronic transactions, and changes in financial consumption structure. The study concludes that higher developed economies are mostly more resilient to economic shocks but generally face challenges related to policy gaps. In contrast, lower developed economies struggle with Compliance gaps, although with decreasing tendencies during the last years.
Keywords: VAT; C-efficiency; Policy gap; Financial crisis; Covid-19; Compliance gap; Higher developed economies; Lower developed economies; VAT system

Information about study

Study programme: Finance and Accounting
Type of study programme: Magisterský studijní program
Assigned degree: Ing.
Institutions assigning academic degree: Vysoká škola ekonomická v Praze
Faculty: Faculty of Finance and Accounting
Department: Department of Public Finance

Information on submission and defense

Date of assignment: 28. 11. 2022
Date of submission: 21. 5. 2023
Date of defense: 16. 6. 2023
Identifier in the InSIS system: https://insis.vse.cz/zp/82952/podrobnosti

Files for download

    Last update: