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Imperfect Competition and the Design of VAT Regimes: The Case of Energy Trade Between Russia and Ukraine

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  • Mr. Clinton R. Shiells

Abstract

Under imperfect competition, Russia and Ukraine may choose to deviate from optimal tax considerations which suggest use of a destination-based VAT regime. Oil and gas trade is a major source of Russian tax revenue, which is collected partly through an origin-based VAT on intra-CIS energy trade. The paper shows that Ukraine may try to capture part of the tax revenue if it has monopsony power. It is far from clear whether Ukraine would succeed in shifting the rents through taxation, since this depends on the form of imperfect competition and the curvature of Ukraine's import demand function.

Suggested Citation

  • Mr. Clinton R. Shiells, 2002. "Imperfect Competition and the Design of VAT Regimes: The Case of Energy Trade Between Russia and Ukraine," IMF Working Papers 2002/235, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/235
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    References listed on IDEAS

    as
    1. Keen, Michael & Lahiri, Sajal, 1998. "The comparison between destination and origin principles under imperfect competition," Journal of International Economics, Elsevier, vol. 45(2), pages 323-350, August.
    2. Berglas, Eitan, 1981. "Harmonization of commodity taxes : Destination, origin and restricted origin principles," Journal of Public Economics, Elsevier, vol. 16(3), pages 377-387, December.
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    4. Genser, Bernd, 1996. " A Generalized Equivalence Property of Mixed International VAT Regimes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 253-262, June.
    5. Mr. Clinton R. Shiells & Mr. John R Dodsworth & Mr. Paul Henri Mathieu, 2002. "Cross-Border Issues in Energy Trade in the CIS Countries," IMF Policy Discussion Papers 2002/013, International Monetary Fund.
    6. Michael Keen & David E. Wildasin, 2000. "Pareto Efficiency in International Taxation," CESifo Working Paper Series 371, CESifo.
    7. Ben Lockwood & David Meza & Gareth Myles, 1994. "When are origin and destination regimes equivalent?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(1), pages 5-24, February.
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