Acta Oeconomica Pragensia 2014, 22(4):3-15 | DOI: 10.18267/j.aop.442

Discussion of methods estimating the VAT gap

Hana Zídková
Vysoká škola ekonomická v Praze, Fakulta financí a účetnictví (hana.zidkova@vse.cz).

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.

Keywords: VAT gap estimates, weighted average VAT rate, input-output tables, tax evasion
JEL classification: C67, H21, H26

Published: August 1, 2014  Show citation

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Zídková, H. (2014). Discussion of methods estimating the VAT gap. Acta Oeconomica Pragensia, 22(4), 3-15. doi: 10.18267/j.aop.442
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