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Polish VAT Measures Could Lock-In Fiscal Gains: IMF

by Ulrika Lomas, Tax-News.com, Brussels

16 July 2015


The International Monetary Fund has welcomed Poland's fiscal plans, but has said that further tax reforms are needed in the medium term.

In its 2015 Article IV Consultation report for Poland, the IMF supported the Government's target of a structural deficit of one percent of gross domestic product (GDP) by 2019. However, it said that additional measures of about one percent of GDP would be needed to reach this objective.

Closing a third of the value-added tax (VAT) compliance gap could increase revenue by about 0.6 percent of GDP in the medium term, the report said.

The IMF said that consideration could be given to reducing the number of VAT rates to improve compliance and lower the burden on the tax administration.

The Fund also said that preventing the 2011 VAT increase from expiring in 2017 would help sustain revenues until tax administration reforms are finalized. In 2011, the headline rate was increased from 22 percent to 23 percent.

Poland's fiscal consolidation efforts have enabled it to exit the EU's Excessive Deficit Procedure one year early, the IMF noted.

TAGS: compliance | VAT rates | tax | economics | value added tax (VAT) | fiscal policy | gross domestic product (GDP) | International Monetary Fund (IMF) | Poland | tax reform | Europe

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