Lithuanian Ministry of Finance Targets 10% VAT Gap with Real-Time Digital Audits

The Lithuanian Ministry of Finance has introduced an action plan aimed at curbing the shadow economy and reducing the national VAT gap. The government targets bringing the VAT gap down to no more than 10% in 2026–2027, and further to 9% by 2028, placing Lithuania below the EU average of approximately 9.5%. According to European Commission and CASE data, Lithuania's VAT gap stood at 13.2% in 2024. With each percentage point reduction estimated at roughly €70 million, reaching the 10% threshold would generate approximately €196 million in additional revenue for the 2026 state budget.

Tax administration is shifting decisively toward automated data analytics. During 2025 and the first half of 2026, the State Tax Inspectorate (VMI) carried out 12,700 VAT compliance actions, uncovering €153 million in undeclared taxes, including €105 million from hidden sales. Since mid-2025, VMI has deployed APSIS, an automated system that monitors i.SAF invoice data in real time to detect transaction chains and suspected carousel fraud. Through APSIS alone, 85 audit procedures have been completed, yielding €1.3 million in additional assessments.

Customs administration is concurrently expanding risk controls through automated X-ray analysis and an analytical engine synthesizing 17 distinct data sources. Cross-border digital sales are also under systematic review: revenue reported by digital platform operators under the EU DAC7 framework is matched directly against corporate FR0600 VAT returns and banking records.

For finance departments and accounting teams, these measures require continuous verification of supply chain transactions. Because APSIS evaluates entire transaction chains automatically, businesses claiming VAT deductions must maintain detailed proof of physical goods movement (consignment notes, warehouse logs) and perform documented supplier due diligence. E-commerce businesses using digital platforms must verify that declared sales in FR0600 returns reconcile precisely with data submitted by platform operators.

A draft legislative package codifying these enforcement measures is scheduled for presentation by the Ministry of Finance in autumn 2026, with key provisions slated to take effect in 2027.