Lithuania Targets a 9% VAT Gap by 2028

Lithuania wants to reduce its value-added tax gap to no more than 9% by 2028. That would put the country below the European Union average of 9.5%.

The VAT gap measures the difference between the tax authorities' expected revenue and the amount actually collected. The government says its main goal is to reduce tax evasion and strengthen honest tax payments. It plans to explain taxes and money management more clearly to individuals and businesses, and intends to submit a legislative proposal by mid-October.

The State Tax Inspectorate and Customs will rely more heavily on data to identify possible problems and respond faster. During 2025 and the first half of this year, the tax inspectorate assessed an additional €153 million in taxes. Its checks include whether all sales have been declared, whether the zero VAT rate has been applied correctly, and whether foreign-supply data and VAT deductions match the rules.

The inspectorate first informs individuals and companies about discrepancies and gives them the chance to correct them themselves. It takes tougher action when they do not respond or when inspectors identify fraud. The authorities are also expanding the use of smart computer systems and artificial intelligence, which have already helped collect about €1.3 million.

The government says higher tax collection would give Lithuania more room to fund social needs and defense.