From research: E-Government and VAT collection

Does the digitization of tax administration affect VAT collection? Economy and state administration digitization are broadly discussed topics. In a paper published by Dr. H. Zídková, prof. M. Arltová and K. Josková in the Policy & Internet journal, the authors focused on VAT collection from the e-government perspective, or rather tax administration and collection digitization and its effects on tax evasion.

The study examined the impact of e-government level on VAT evasion. In the dynamic panel regression model on the EU’s Member States data between 2003 and 2020, proxies used were e-government Development Index and VAT gap. Findings show that more developed e-government reduces VAT gap, i.e. improves VAT collection.

Furthermore, in addition to the e-government level, the VAT share in tax revenues also reduces tax evasion. However, VAT gap is increased by households’ final consumption and the standard VAT rate. Though different factors affect VAT evasion in different Member States.

Read further about tax administration digitization, VAT collection, how VAT share in tax revenues reduces tax evasion and policy implications at: https://onlinelibrary.wiley.com/doi/10.1002/poi3.389