- The VAT gap, comprising a “compliance gap” (unpaid VAT) and a “policy gap” (foregone VAT due to policy choices), is calculated using a “top-down consumption approach” based on national accounts.
- The 2025 report shows the compliance gap steadily declined for nine years, including during COVID-19 due to consumption shifts and increased electronic payments, but has slightly risen in 2022-2023.
- Digital reporting tools like SAF-T and e-invoicing have significantly reduced the compliance gap (e.g., a 3-percentage point average reduction for SAF-T), indicating their effectiveness in improving VAT collection.
Source VATvocate.com
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