European Commission criticizes Lithuania for poor VAT collection

“It should be noted that the difference between the VAT revenue actually collected and the theoretical tax liability in Lithuania still remains large, which shows a potentially high level of tax evasion related to VAT,” the Commission said in a report on tax reforms in EU Member States.

According to the Commission, the country places too heavy a tax burden on low-income earners and will face challenges with modification of housing taxation, corporate income tax breaks and the tax authority’s activities as well as with implementation of tax liabilities.

As estimated by the Commission, the level of various other consumption taxes (besides VAT, taxes on energy, and alcohol and tobacco duties) in Lithuania is the lowest in the European Union (EU).

In January through August, Lithuania collected 2.056 billion euros in VAT revenue, which was 55 million euros, or 2.7 percent, below the target.

Finance Minister Rimantas Šadžius earlier said that the gap with VAT revenue collection was being reduced but the annual VAT revenue might still come below the planned amount. He said that this shortfall was being covered with other taxes, hence the general budget performance was positive.

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