Modelling value-added tax in the presence of multiproduction and differentiated exemptions
AbstractWe develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as they are implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. A detailed VAT framework is important for correct modelling of VAT within a general equilibrium model. Such a framework is also of value in correctly representing the distribution of indirect tax payments within the database of a general equilibrium model, a prerequisite of accurate welfare analysis. We use the model to analyse the effects of simplifying Vietnam’s complex VAT system. We simplify the system by moving from three tax rates to one budget-neutral rate, while also removing many discretionary exemptions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 13914.
Date of creation: 03 Mar 2009
Date of revision:
value added tax; dynamic CGE model; Vietnam; indirect tax reform;
Other versions of this item:
- Giesecke, James A. & Nhi, Tran Hoang, 2010. "Modelling value-added tax in the presence of multi-production and differentiated exemptions," Journal of Asian Economics, Elsevier, vol. 21(2), pages 156-173, April.
- James Giesecke & Nhi Hoang Tran, 2009. "Modelling Value-Added Tax in the Presence of Multiproduction and Differentiated Exemptions," Centre of Policy Studies/IMPACT Centre Working Papers g-182, Victoria University, Centre of Policy Studies/IMPACT Centre.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-14 (All new papers)
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