Securing Orders as a Tool in the Fight against Tax Evasion: Czech Republic Case Study

Abstract

Research background: Combating tax evasion is part of tax administration in most countries. As globalization progresses, tax evasion and tax fraud are growing. All this has a negative impact on tax revenues of state budgets. Globalization is helping to apply similar practices by states against tax evasion. Within the EU, it is mainly about harmonization and common procedures for VAT. Revenues from VAT are a significant revenue of the state budget also in the Czech Republic, therefore various tools are used in the constant fight against VAT fraud. Purpose of the article: The aim of the article is to evaluate the effectiveness of securing orders in the fight against VAT fraud in the Czech Republic. Methods: Data for the monitored period 2014 - 2018 were obtained from documents of the Financial Administration of the Czech Republic. The analysis of securing orders and the estimation of the costs of their issuance is performed based on the stated data. Subsequently, the effectiveness of issued securing orders in the monitored period is evaluated. Findings & Value added: In the context of globalization, a number of studies deal mainly with the causes and effects of tax arrears, tax evasion and the tax gap. This paper discusses the fight against tax evasion, focusing on a specific instrument - securing orders. Based on the analyzes, an estimate is made of the costs of issuing securing orders. Subsequently, the effectiveness of securing orders is evaluated as one of the instruments in the fight against VAT fraud.