Hungary told to improve VAT fraud record by IMF
- 19 June 2014 | Richard Asquith
In its latest report on the financial state of Hungary, the International Monetary Fund has underlined the need to further address Hungarian VAT fraud.
The IMF highlighted on-going problems in the processed meat sector, saying missing trader VAT fraud remained rife. The Hungarian government VAT fraud measures have been extensive, but some measures had been blocked by the European Commission. Hungary had applied under the VAT fraud Rapid Response Mechanism to apply the reverse charge on the domestic supply of some meats, but this had been turned down by the EC.
It is estimated that VAT fraud accounts for almost 2% of the country’s GDP. The IMF also recommended cutting one of the two reduced VAT rates to help simplify compliance, and shore up tax revenues.
The Hungarian deficit now stands at almost 3%, and has increased recently. This would put it above the target Euro-currency 3% deficit to GDP target.