Efficiency of Vat Collection : How Do the Old and New EU Member States Compare?

We focus on the efficiency of the VAT system in the old and new EU Member States. We calculated C-efficiency, Policy gap and Compliance gap for all member States in the period 2005 to 2018 for the groups of new and old member states. C-efficiency and Compliance gap are higher in new Member States. Conversely, the policy gap is higher in old Member States. We proved by the pair t-tests of the means that in the old Member States the efficiency indicators are more stable than in the new Member States. The regression analysis showed that the significant factors influencing the VAT efficiency indicators are GDP per capita and the implicit tax rate of consumption, both increasing the VAT efficiency. Furthermore, the Compliance gap grows with a higher share of household final consumption in the economy and the Policy gap grows with a higher share of services in GDP