VAT Rates and their Impact on Business and Tax Revenue

Petr Mach
European Research Studies Journal, Volume XXI, Issue 1, 144-152, 2018
EOI: 10.11214/thalassinos.21.01.013

Abstract:

Tax rates have impact on business activity and on the volume of the tax revenue. This relation is generally known as the Laffer curve.In this article data on VAT rates and revenues in the Czech Republic between 2006—2015 are used to estimate the Laffer curve and to find the revenue maximising tax rates.It is shown that the standard rate of VAT in the Czech Republic is behind the revenue maximising rate and that decreasing the rate would help the taxpayer as well as the state budget.


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