Malta is one of 11 EU member states that made a marked improvement in VAT collection in 2013, thought it still came under by €210 million.

The island remains among the top 10 member states having a high rate of VAT evasion.

Based on VAT collection figures from 2013, a European Commission study shows that the difference between expected revenue and the amount actually collected, the so-called VAT gap, improved by 4.6 per cent over the previous year.

While Malta’s calculated VAT gap in 2012 stood at 31 per cent, it dropped to 26.4 per cent a year later. However, this figure remains much higher than the 15.2 per cent average in the EU.

While Malta’s calculated revenue from VAT in 2013 should have totalled €796 million, only €586 million were recouped.

Brussels said that although Malta had one of the highest VAT gaps in the EU, the latest figures available indicated that the situation was much better than in 2012. Then, €536 million from VAT went into Malta’s tax coffers even though the amount should have been €777 million, a shortfall of €241 million.

The study shows that, in 2013, the estimated VAT gaps of member states ranged between four per cent in Finland, the Netherlands and Sweden to 41 per cent in Romania.

Malta’s closest neighbours all had higher VAT gaps than the island, varying from 34 per cent in Greece to 33 per cent in Italy.

The total amount of VAT lost across the EU is estimated at €168 billion in 2013, according to the study. This equates to 15.2 per cent of revenue loss due to fraud and evasion, tax avoidance, bankruptcies, financial insolvencies and miscalculation in member states.

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, said the results highlighted the need for further reform in VAT collection systems across the EU.

“I urge member states to take the necessary steps to fight tax evasion and tax fraud at all levels. This remains a burning issue and is at the top of the Commission’s agenda,” he said.