ViDA as a future approach to VAT

Digitalization currently affects several aspects of fiscal policy, and financial administration must figure out how to deal with modern and progressive strategies to ensure their effectiveness in collecting tax revenues.The paper deals with the progress of digitalization in the context of value added tax (VAT).For EU Member States, the revenues from VAT influence the prosperity of their economy since it represents a significant part of their tax mix.A few years ago, the European Commission started discussing the modernization of VAT's approach in the context of digitalization.This resulted in the proposal of a new directive called ViDA (VAT in the Digital Age).The approach focuses mainly on e-invoicing, making reporting transactions easier and quicker.Furthermore, the proposal of the ViDA Directive represents a single VAT registration and regulation of digital platforms.The aim of the article is to introduce the reader to the ViDA Directive and highlight that each EU Member State needs to start preparing for the new EU legislation.