Costs of VAT collection outweighs the value of VAT Collected! Successful VAT collection remains elusive because traditional methods are still being used for collection in today’s complex world of commercial transactions and sophisticated products. Tax compliance costs have been a concern for centuries. There are many common challenges in taxation in every country:
Excessive legal reporting obligations due to fixes of an outdated VAT system. The costs of VAT compliance are a major administrative burden for businesses
Taxpayers suffer stress, anxiety and frustration as a result of attempting to comply with their tax obligations.
Efficiency costs (variously referred to as deadweight losses or excess burden), involving tax-induced market distortions.
The costs to the government (ultimately borne by taxpayers) of administering and collecting the taxes (usually referred to as “administrative costs”)