The VAT base in Poland has its weaknesses due to both domestic and EU polices. National authorities overuse reduced rates, making the VAT system too complicated and problematic for businesses while a zero rate on intra-EU trade incentivizes fraud.
Possibility to set statutory VAT rate below 15% for a wider set of different goods and services may lead to lower effective VAT rates in various Member States. Therefore, countries, which have fewer exemptions and/or reduced rates, may maintain the same principles of taxation but lower their standard VAT rate.
Index of Economic Freedom was released last week. Slovakia ranked 57th – 15 places down from previous year.