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Discussion of methods estimating the VAT gap
[Diskuse metod odhadů mezery DPH]

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  • Hana Zídková

Abstract

The paper focuses on methods of quantification of VAT evasion. It describes the top-down methods using the National Accounts data for the calculation of the theoretical VAT liability. These methods first compute the theoretical VAT base in the whole economy. Then the base is multiplied by the weighted average VAT rate to get the theoretical VAT. The VAT gap is then obtained as the difference between the theoretical VAT liability and the accrued VAT revenues of the state budget. The first method described is based on the supply and use tables; the second method is a product of the calculation of a weighted average VAT rate by a model (WAR) performed by statistical offices. The third one is derived from the GDP as reported in the National Accounts. Finally, estimates of the VAT gap in the Czech Republic for 2006 to 2010 are compared and the differences in the methods discussed.

Suggested Citation

  • Hana Zídková, 2014. "Discussion of methods estimating the VAT gap [Diskuse metod odhadů mezery DPH]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2014(4), pages 3-15.
    • Handle: RePEc:prg:jnlaop:v:2014:y:2014:i:4:id:442:p:3-29
    DOI: 10.18267/j.aop.442
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    References listed on IDEAS

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    1. Michael Keen, 2013. "The Anatomy of the Vat," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(2), pages 423-446, June.
    2. Reckon, 2009. "Study to quantify and analyse the VAT gap in the EU-25 Member States," Taxation Studies 0029, Directorate General Taxation and Customs Union, European Commission.
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    More about this item

    Keywords

    VAT gap estimates; weighted average VAT rate; input-output tables; tax evasion;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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