The State Tax Inspectorate (VMI) has created a plan, which it will present to the Government, how to add another billion litas to the budget by reducing administrative costs and reducing the underground economy. For this it is planned to create a smart tax administration system.

In addition, VMI is implementing 7 projects directed against tax evasion. No one exactly knows how much money is in the shadow economy but a study by the Centre for Sustainable Business of the Stockholm School of Economics in Riga has revealed that underground economy related to labour relations constitutes more than LTL 3 billion (EUR 868 million) in Lithuania. And the study did not include results from smuggling, prostitution, drug trafficking and other illegal activities. Still, evasion to pay value added tax makes the biggest portion of shadow economy.

The European Commission says that Lithuania's budget does not receive several billion euros each year and VAT evasion accounts for 60% of underground economy.

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