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10B Annual Loss in Uncollected VAT

Stacks of coins with the letters VAT isolated on white backgroundAccording to a European Commission report published on September 20, within the period 2008-2011 Greece lost some 40 billion euros in uncollected Value-Added Tax.
According to Greek media reports, Greece had the second-worst performance, following Romania, among the countries that have seen their VAT gap grow since the start of the financial crisis. Spain, Greece, Latvia, Ireland, Portugal and Slovakia saw the highest increases in their gaps, Friday’s EC report said.
As the EC report showed, data reveal that Greece lost revenues of 9.7 billion euros in 2011 in uncollected indirect taxes along with a similar amount in the three previous years.
Furthermore, the report notes, the VAT gap does not only relate to fraud and evasion, but also to legal tax avoidance, bankruptcies, financial insolvencies, miscalculations and the performance of tax administrations.
The report also suggests that the VAT gap can be attributed to complex tax systems with a narrow base and multiple rates and exemptions.

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