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The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

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  • Haichao Fan
  • Yu Liu
  • Nancy Qian
  • Jaya Wen

Abstract

This paper uses a balanced panel of large manufacturing firms to provide novel evidence on the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization explains 14.38% of cumulative VAT revenues and increases the effective average tax rate by approximately 4.7-14% in the seven subsequent years. The evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.

Suggested Citation

  • Haichao Fan & Yu Liu & Nancy Qian & Jaya Wen, 2018. "The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms," NBER Working Papers 24414, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24414
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    References listed on IDEAS

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    Cited by:

    1. Andres Gonzalez Lira & Ahmed Mushfiq Mobarak, 2018. "Enforcing Regulation under Illicit Adaptation," HKUST IEMS Working Paper Series 2018-57, HKUST Institute for Emerging Market Studies, revised Aug 2018.
    2. Gonzalez-Lira, Andres & Mobarak, Ahmed Mushfiq, 2019. "Slippery Fish: Enforcing Regulation under Subversive Adaptation," IZA Discussion Papers 12179, Institute of Labor Economics (IZA).
    3. Mazhar Waseem & Mazhar Waseem, 2019. "Information, Asymmetric Incentives, or Withholding? Understanding the Self-Enforcement of Value-Added Tax," CESifo Working Paper Series 7736, CESifo Group Munich.

    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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