European Commission criticizes Lithuania for poor VAT collection

The level of VAT revenue collected in Lithuania is well below that which could be collected, the European Commission has said.

“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).