A General Framework for Measuring VAT Compliance Rates
Summary measures of VAT compliance rates are valuable for identifying problem areas in VAT implementation. They are also essential for meaningful cross-country and cross-time comparisons of VAT compliance. We present a comprehensive and general framework for calculating VAT compliance rates at both the economy-wide and detailed sectoral levels. Unlike existing measures of VAT compliance, our framework isolates a compliance measure from the effects on VAT receipts of detailed features of VAT systems as actually implemented by tax authorities. These features include multiple VAT rates, exemptions, registration rates, refund limitations, informal activity, taxation of domestic non-residents, and undeclared imports. We implement our comprehensive VAT compliance measure for Vietnam, a country with a complex VAT system. Our estimate of Vietnam's VAT compliance rate is about eleven percentage points higher than that calculated by the most popular measure of compliance, collection efficiency (CE). Our method facilitates decomposition of the difference between CE and our VAT compliance measure into the individual contributions of statutory and structural features of Vietnam's VAT regime.
|Date of creation:||Aug 2010|
|Date of revision:|
|Publication status:||Published in Applied Economics, Vol. 44(15), May 2012, pp. 1867-1889.|
|Contact details of provider:|| Postal: PO Box 14428, Melbourne, Victoria, 8001|
Phone: 03 9919 1877
Web page: http://www.copsmodels.com/about.htm
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luiz de Mello, 2008. "Avoiding the Value Added Tax: Theory and Cross-Country Evidence," OECD Economics Department Working Papers 604, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:cop:wpaper:g-206. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Horridge)
If references are entirely missing, you can add them using this form.