Fiscal Effect of VAT Control Statement - Case Study of the Czech Republic

Abstract

This article first aims to identify the final fiscal amount of the VAT control statement in the selected region and then to transform it to determine the theoretical fiscal amount in the entire Czech Republic. The second goal is to identify a possible impact of VAT control statements on tax evasion. For this purpose, the following tools have been used: calls for submission of control statements, reasons to initiate inspection arising from matching the control statements, tax audits, and the process to remove tax doubts. Using the foregoing tools, the theoretical fiscal revenue is quantified and then compared with the VAT gap from 2015 to 2016. The VAT gap is measured by adjusting the gross domestic product; the data from the national accounts database published by the Czech Statistical Office are used as the basic data source. The authors have arrived at the conclusion that once the financial administration implemented the selected tools for total tax collection, then right after implementing the VAT control statements in 2016 the VAT gap slightly decreased in comparison with the previous year (and in proportion to year-on-year comparison of GDP), which resulted in the increase in the overall VAT collection.

Keywords

• value added tax
• control statement
• fiscal effect
• payer
• tax evasion