Deloitte have welcomed the latest figures from the EU showing that the level of unpaid VAT in Ireland is less than the EU average

Our analysis

For a number of reasons EU countries will not collect all the VAT that is due to be paid to them. The EU has issued figures estimating that the VAT loss for Ireland for 2013 due to fraud, evasion, tax avoidance, bankruptcies, financial insolvencies and miscalculations is 11% of the total VAT that could be collected. This figure is notably below the EU average of 14% (Finland was lowest at 4% and the highest was Romania at 41%) and can be compared well against the UK where the loss is  only slightly less at 10%. 

Also, even though the average EU VAT loss has increased by 1.6% over what it was in 2012 the position for Ireland is a decrease of 0.5% over what it was in 2012. Also, the latest figure can be compared very favourably with 2009 when the loss was 14%.

The fact that the figures for Ireland is less than the EU average is a testament to the work being done by the Revenue Commissioners. It also strongly supports the contention that VAT fraud and evasion is not a major problem in Ireland and that the vast majority of businesses are not engaged in VAT fraud or evasion which is to be welcomed.

In monetary terms the total EU VAT loss was estimated at €168bn with the major EU trading countries making up the majority of that loss - (Italy (€47bn), Germany (€25bn), UK (€15bn) and France(€14bn)). Even though the loss for Ireland of €1.225bn is only a small proportion of the overall loss it is still a very significant sum in terms of our domestic budget.  Based on the best in class (Finland at 4%) there is a potential for significant increase in the amount of VAT that can be collected with each 1% reduction in the VAT loss resulting in additional VAT for the exchequer in excess of €100m

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