Template-Type: ReDIF-Paper 1.0 
Title: Measuring the sectoral VAT gap in Bulgaria: estimates and its drivers
Author-Name: Piotr Dybka 
Author-Name: Stanisław Bartha 
Author-Name: Anna Komisarska 
Author-Name: Michał Kowalczuk 
Abstract: The goal of this paper is to estimate the level and provide a sectoral decomposition of the VAT gap in Bulgaria based on the unique dataset provided by the National Revenue Agency in Bulgaria (NRA). We focus on the output VAT gap. Our potential VAT estimate  takes into account the value of output VAT based on the estimate of sales. Our study also seeks potential macroeconomic factors that affect the VAT gap and obtained results indicate that a higher VAT gap can be associated with a larger share of micro enterprises, changes in the business cycle (i.e. increase in firm death rate and unemployment). Moreover, firms with higher shares of revenues from sales to government observe markedly lower output VAT gap. In Bulgaria, the largest share of the VAT gap in overall value of VAT is observed in the trade sector, followed by the information and communication sector and professional, scientific, and technical activities.
Number: 2026-118
Length: 14 pages 
Creation-Date: 2026-01
Keywords: Shadow economy, VAT gap, VAT, Tax gap
Classification-JEL: C51, E26, H21, H26, O17
File-URL: https://hdl.handle.net/20.500.12182/1436
File-Format: Application/pdf
DOI: 10.33119/kaewps2026118
Handle: RePEc:sgh:kaewps:2026118