Tax Gap Analysis for Moldova

Payroll, corporate, and value-added (VAT) tax collections increased from 10 percent in 2013 to 20 percent in 2014. These tax collections came to 9 percent of GDP in 2014. Excise taxes collected during the past three years for alcoholic drinks and tobacco products decreased from 2013 to 2014. In contrast, GDP growth, in nominal lei terms, increased by 14 percent in 2013 and by 11 percent in 2014. The weighted effective tax rate for personal income probably falls at around 7-10 percent, and the average effective corporate rate probably also comes in at around 7-10 percent of company profits. In theory, if the Moldovan government collected all taxes due, the government should collect roughly 30 percent of GDP. Tax collections generally kept up with broader economic growth, with GDP growing by 11 percent and payroll tax and VAT growing similarly by around 10-11 percent. A quick-and-dirty tax gap estimate can be made by subtracting the tax share as a percent of GDP from what it should be. Payroll taxes came out to about 2 percent of GDP, corporate about 2 percent, and VAT about 4 percent of GDP. This suggests that the personal income tax gap comes to around 6-8 percent of GDP, company tax about 6-8 percent of GDP, and VAT about 10-14 percent of GDP. The tax gap can be estimated using a top-down approach, which involves estimating the total tax gap as a percentage of GDP. This can be done by comparing the actual tax collections to the theoretical tax collections, which are based on the official tax rates. The top-down estimate of Moldova's tax gap is around 20 percent of GDP. The tax gap can also be estimated using a bottom-up approach, which involves estimating the tax gap for each type of tax separately. This can be done by analyzing the tax returns and other data from the Moldovan taxpayer's database. The bottom-up estimate of Moldova's tax gap is around 18-20 percent of GDP. The tax gap can be influenced by various factors, including the effectiveness of tax collection, the level of tax evasion, and the level of tax avoidance. The tax gap can also be influenced by changes in the economy, such as changes in GDP growth and inflation. The Moldovan State Tax Service has introduced new measures aimed at collecting the information needed to make tax gap estimates quickly and accurately. These measures include the use of new technologies and the implementation of new procedures for collecting and analyzing tax data. The tax gap is an important issue for the Moldovan government, as it can have significant implications for the country's revenue collection and economic growth. The government has a number of options for addressing the tax gap, including increasing tax enforcement, improving tax administration, and implementing tax reforms. The tax gap can be estimated using various methods, including the use of macroeconomic data and microeconomic data. The use of macroeconomic data involves estimating the tax gap as a percentage of GDP, while the use of microeconomic data involves estimating the tax gap for each type of tax separately. The Moldovan government has a number of options for addressing the tax gap, including increasing tax enforcement, improving tax administration, and implementing tax reforms. The government can also use the tax gap estimates to inform its tax policy and to make more informed decisions about how to address the tax gap. The tax gap is an important issue for the Moldovan government, as it can have significant implications for the country's revenue collection and economic growth. The government has a number of options for addressing the tax gap, and it is essential that it takes a comprehensive approach to addressing this issue.