An increasingly out-of-touch European Commission has reported that Portugal’s VAT evasion rate is a mere 9%.
The european average is reported to be around 14%, according to data from the Commission leaving Portugal as a shining example of tax collection efficiency.
The figures are for 2013 and show Romania, Lithuania, Slovakia, Greece and Italy leading the field with tax evasion rates of over 30%.
At the 'good boy' end of the scale are Finland, the Netherlands, Sweden and Luxembourg where less than 5% of VAT revenue is said to be lost.
Spain (16.5%), Germany (11.2%), UK (9.8%) and Denmark (9.3%) all perform worse than Portugal in the questionable report.
The difference between the VAT revenue collected in Portugal in 2013 and the estimated revenue for that year, the so-called ‘tax gap’ was 9%. In 2011, this figure was 13%.
The key to this laughably low figure must be the definition of ‘estimated revenue’ as this figure may be influenced by government.
If the government estimate is low, the tax gap will be correspondingly reduced making Portugal seem like a dutiful nation when it comes to declaring and paying IVA.
For the year under study, the state collected €13.71 billion in VAT when it could have collected, €15.07 billion according to the EC which estimates that €1.36 billion was the amount lost to tax evasion.
Portugal’s Ministry of Finance of course is delighted and points out that the study reveals a "consistent decrease of tax evasion in Portugal over the past few years, now 40% below the average of the EU-26."
"With the strengthening of measures to combat fraud and evasion that have been implemented since 2012, with a special focus on the e-invoice system and other methods of combating fraud, expectations on reducing the evasion level in Portugal are even more promising," and the last known budget results show a "very significant increase in overall tax revenues in 2014 and 2015, due to VAT," said Maria Luís Albuquerque’s ministry.
The government certainly is becoming adept at collecting taxes due and the figure is rising year on year but an evasion figure of 9% for 2013 should be viewed with deep suspicion.
