“The extortion of VAT returns and development of the grey zone are the main factors that sharply increased the state budget’s losses,” said Leszek Skiba, undersecretary of state at the Ministry of Finance. This peaked in 2012, when the VAT gap amounted to PLN 43.1 billion. In mid-2016, the Ministry presented a plan to reduce the gap from 23.9% in 2015 to around 15% in 2017.

“This target was supposed to be reached in three years,” said Jan Sarnowski, an expert at the Polish Economic Institute. “It was reached significantly faster. In 2017, we lowered the gap to around 14%.” VAT collection has improved so much due to the constantly expanded fuel package and split payment mechanism, among other factors.

Piotr Arak, director of the Polish Economic Institute, notes that Poland’s success combating the VAT gap is based on three pillars: modern legislation, effective administration and intensive cooperation with business. “It is above all the success of an effective tax administration that is open to new ideas, cooperating with the business sector and equipped by law with certain powers. These enabled the number of checks to be reduced by almost one-fifth, while increasing their effectiveness significantly.”