Malta lost potential VAT revenue of €21 million in 2011, which was well within the EU average of the so-called VAT Gap, a study issued today shows. 

Countries such as Spain, Greece, Latvia, Ireland, Portugal and Slovakia saw the highest increases in their VAT gaps, whereas Sweden, Poland, Malta, Bulgaria and the Czech Republic were able to improve their levels of collections relative to the VAT theoretical liability (VTTL).

The report says the VAT Gap narrowed sharply after Malta joined the EU. The financial crisis that started in 2008 did not cause any appreciable increases in the gap. On the contrary, the gap narrowed from 13 percent in 2007 to 4 percent in 2011, the latter result due to exceptionally high receipts that year.

Malta has the second lowest standard rate of VAT in the EU at 18 percent.

EU LOSING €193 BILLION IN VAT REVENUE

The report shows that the European Union's  member states may be losing €193 billion annually in value-added tax revenues due to tax evasion and a lack of enforcement.

EU Tax Commissioner Algirdas Semeta said the amount of revenue slipping through the governments' nets was "unacceptable, particularly given the impact such sums could have in bolstering public finances.

While evaded or not-claimed tax payments are inherently hard to measure, the estimated loss adds new urgency to a series of planned European VAT reforms to stop multinational companies from avoiding the tax.