- In 2023, the Czech state collected about CZK 573 billion in VAT, but significant revenue is lost due to tax settings and collection inefficiencies.
- The VAT compliance gap (mainly tax evasion, errors, and late payments) is estimated at CZK 50 billion, or 8% of potential revenue, with room for improvement through better collection and digitization.
- The VAT policy gap, caused by reduced rates and exemptions, is much larger; unifying rates could add CZK 83 billion, and the actionable exemption gap is CZK 125–130 billion.
- The total actionable policy gap is about CZK 210 billion, representing the maximum additional revenue possible by optimizing VAT design.
- Combined with closing the compliance gap, VAT collection could theoretically increase by up to CZK 260 billion without raising the basic tax rate.
Source: deloitte.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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