Implementation Of Value Added Tax Research Articles

Does the Value-Added Tax Add Value? Lessons Using Administrative Data from a Diverse Set of Countries

The value-added tax (VAT) is a cornerstone of the modern tax system. It has many desirable properties in theory: it does not distort firms' production decisions, it is difficult to evade, and it generates a substantial amount of revenue. Yet, in many countries there are discrepancies between the textbook model of the VAT and its practical implementation. Where the VAT implementation diverges from its textbook model, the tax may lose its desirable properties. We draw on firm-level administrative VAT records from 11 countries at different income levels to examine the functioning of real-world VAT systems. We document four stylized facts that capture departures from the textbook VAT model which are particularly pronounced in lower-income countries. We discuss the effects on VAT performance and simulate a counterfactual retail sales tax and a turnover tax. Despite its shortcomings, we conclude that the real-world VAT is superior to the alternatives.

Empirically Investigating the Perception of Value-Added Tax in Saudi Arabia

Recently Value-Added Tax (VAT) has been implemented in Saudi Arabia. This study explores the perception of VAT from various perspectives to evaluate recent experience in VAT implementation. An online questionnaire was developed and distributed in Arabic and English to survey VAT awareness in Saudi Arabia. A total of 349 responses were collected and analyzed to obtain the results. The findings reveal that most sample respondents know about VAT and its positive effect on tax revenues and concur with the importance of its proper implementation. However, VAT has raised commodity prices, and its implementation encounters multiple issues. Participants were unsure that exemptions granted to certain services and equipment would leave the taxpayer with a sense of unfairness.

The Sectoral Effects of Value-Added Tax: Evidence from UAE Stock Markets

This paper investigates the impact of 19 announcements pertaining to the introduction of value-added tax (VAT) in the United Arab Emirates (UAE) on equities listed on the Abu Dhabi Stock Exchange (ADX). Using a well-established event study methodology over the period 2015 to 2018, a sector-wise assessment of the value constructiveness or destructiveness of these announcements is conducted. In addition, an estimation of sector-wise changes in systematic risk following these announcements is provided. Significant sectoral differences in abnormal returns are observed with industries such as insurance and retail showing higher sensitivity. Certain announcements are identified as exerting more impact than others. The results document the outcome of the implementation of VAT and provide guidance to other countries in the Gulf region that plan to introduce VAT.

Value Added Tax Administration and its Implications for Tax Performance

In developing countries, tax reforms have focused on minimising trade taxes, switching to value-added tax (VAT), and reduction of direct tax rates; recently, reform efforts have shifted to improving tax administration. Reportedly, Namibia, like many other developing countries, has been experiencing increasing government expenditure and declining revenues implying the government has not been mobilising sufficient domestic resources. A number of factors could be driving the implied weak tax performance including inefficient tax administration, corruption, and distrust of tax administration. Adopting a descriptive concurrent mixed methods research strategy, this study assesses the achievement or otherwise of VAT implementation in Namibia on tax performance. The study findings include inadequate taxpayer education, insufficient information integration and communication among taxpayers and administrators, and inadequate VAT policy implementation capacity, among others. Improvements could include technology adoption, quality taxpayer education, and awareness aimed at boosting taxpayer morale.

Determinants of Value Added Tax in Oman

Value Added Tax (VAT) system started to implement only in the year 2018 in Gulf Corporation Councils countries. The main purpose of this study is to understand to a great extent the determinants of VAT in Oman by using a qualitative approach. The research survey has used purposive sampling techniques to select a group of individual accountants who are working in a small and medium sized business. The study has considered respondents’ basic knowledge in accounting and experience by adopting a qualitative approach and selected 26 respondents as sample size involving semi-structured interviews. The findings suggested that there is a positive impact on determinants of VAT (VAT law, VAT awareness, and VAT impacts) with the implementation of VAT in Oman. The study highlights the broad scope of VAT in Oman specially to remove VAT ambiguity among citizens. The study identified not only citizens believes on VAT but also each set of interviewees’ responses can be understood in different ways. The paper provides a path for strategic insights and practical thinking by software providers, accountants, managers, governments, and the general public. The study has shown that the majority of the respondents did not exactly know about the overall scope of VAT, intra sales and purchase between countries, input tax, output tax, and zero tax. Determinants of VAT law, VAT awareness and VAT impacts are not well understood, especially by micro, small and medium enterprises. But the majority of the respondents were ready to accept and agree that VAT impacts Oman’s GDP significantly.

Public Awareness Towards Value Added Tax (VAT) System in Hetauda Sub-metropolitan City Area

Value added tax (VAT) is indirect sources of revenue collection of nation. It has been the most essential choice like our developing countries, Nepal. Which leads to revenue enhancement and sustainable economic development. As VAT was an emerging concept in Nepal, a comprehensive taxpayer education program was launched to impart knowledge regarding the various aspects of VAT to parliamentarians, industrialists, businessmen, consumers as well related society. The study used descriptive and survey research design. Data were collected through questionnaires. Statistical tools were used to make a proper analysis. It is found that 20% businessmen and 33.33% consumers are not aware that the Government of Nepal is levying VAT on all kind of products, 36% consumers are not aware of the fact that you pay VAT whenever you purchase any product, 88 % of the total respondents knowledge on earning from VAT is a major source of revenue for Government, only 44 % response of respondents are in favor of billing system, 33.33% consumer are not aware about existing rate of VAT in Nepal, 44% consumers specify the other problem in the present VAT implementation except VAT collection ,VAT refund and registration. Most of them ask for tax invoice to get the authenticity of sellers. VAT must be successful and this largely depends upon the public awareness, honesty, faith and morality of tax officials and the business community. There is a need for willpower and action. It is also found that public awareness program and tax education play prime role to increase the VAT revenue in Nepal. The finding of this study is majority of Tax expert and businessmen are aware about VAT system but the training and awareness program is essential.

Contentious issues on Value-Added Tax and Sales Tax in Nigeria: A review of conflicting court decisions

Taxation is a universal means of revenue generation by governments worldwide. It is the oldest form of revenue generation. Many countries rely on taxes as an avenue for revenue generation to foster development and improve the welfare of their citizens. There are different types of taxes computed in line with the tax policies of individual countries. Nigeria, like many other countries, relies on taxes alongside other sources of revenue for its recurrent and capital expenditure. The various taxes in Nigeria include value-added tax (VAT), sales tax, company income tax and personal income tax. This article looks at contentious issues arising from the implementation of VAT and sales tax in Nigeria. The article adopts doctrinal methodology by reviewing case law and tax legislation, and using a comparative analysis approach. The article considers the provisions of the law and their applicability in the Nigerian federal system of government. The article also considers the powers of the federal and the state governments in respect of VAT and sales tax. The article finds that a major challenge in the implementation of VAT and sales tax in Nigeria is the debate between the states and the federal government of Nigeria about which tier of government has power over VAT and sales tax. The article recommends that states should be allowed to have power over VAT and sales tax alongside the federal government, as occurs in other federal settings. In addition, the end users of most consumable items are domiciled in the various states of Nigeria.

English

The study aims to identify the impact of value-added tax (VAT) on Saudi banks, through measuring the impact of changes in the banks before and after the implementation of Value Added Tax (VAT), in all of total assets, total liabilities, customer deposits, retained earnings, total operating income, total operating expenses and net operating income. The study targeted the fourth quarter of 2017 (before the implementation of VAT), and the first and second quarters of 2018 (after the implementation of VAT). The study found that there is a slight decline in total assets, total liabilities, customer deposits and current accounts, in addition to a significant decline in retained earnings, total operating expenses after the implementation of VAT. On the other hand, the study found that there is a slight increase in the total income of operations and a significant increase in net operating income after the implementation of value-added tax. Moreover, the study found that there are no statistically significant differences between total assets, total liabilities, customer deposits, current accounts, total operating income, total operating expenses, net operating income before and after the implementation of value-added tax; while there are statistically significant differences between retained profits before and after VAT. Key words: Commercial banks, value-added tax (VAT).

Impact of Saudi Arabia’s Sugary Drink Tax on Prices and Purchases (P10-066-19)

ObjectivesConsumption of sugar-sweetened beverages (SSBs) has been associated with weight gain and an increased risk of type 2 diabetes and cardiovascular disease. Use of governmental policies, such as taxation, to reduce SSB consumption, has been successful in a number of global settings. However, the impact of such tax has not been examined in Arab Gulf countries where prevalence of obesity is high, and a unified excise tax was adopted in 2016. This tax increased the price of soda and energy drinks by 50% and 100% respectively, making it the largest beverage tax to date. date. Saudi Arabia was the first of the six Arab Gulf countries to implement these taxes in June 2017, followed by the United Arab Emirates, Bahrain, Oman, and Qatar. Saudi Arabia additionally added a 5% value added tax (VAT) to their beverage tax in 2018. We describe the impact of these excise taxes by examining price changes and purchases of taxed beverages pre-post taxation in Saudi Arabia MethodsThis is an observational study of a natural experiment with a pre-post design. The Saudi General Authority for Statistics’ national-level monthly survey of average prices for soda from 2009–2018 was used to describe the changes in the prices of the taxed beverage before and after the tax’s implementation. The 2004–2018 Euromonitor annual volume sales data for Saudi Arabia was used to describe the changes in soda and energy drink sales. ResultsPost beverage and VAT implementation, annual pruchases (volume per capita) of soda and energy drinks were reduced by 41% and 58%, respectively in 2018 compared to 2016. During the same time period, soda prices prices increased by 67% compared to the announced 55% tax rate (price per can from 1.5 to 2.5 Saudi Riyals). Prior to the implementation of excise taxes, soda prices have been consistent in Saudi Arabia, except for one price increase by manufacturers in 2010 (Figure 1). ConclusionsThese results highlight the substantial impact of excise taxation on the reduction of soda and energy drink sales in Saudi Arabia and contribute to the growing body of global evidence on the effects of SSB taxation on consumption, especially in other Arab Gulf countries that have implemented a similar tax structure. Funding SourcesReem Alsukait is a doctoral student supported by King Saud University, Saudi Arabia. Supporting Tables, Images and/or Graphs▪

An Analysis of Value-Added Tax (VAT) Awareness and Perception in Bahrain

This study aims to explore the consumers’ perception and awareness of VAT in the Kingdom of Bahrain. The current study employed a quantitative approach by surveying a number of individuals living in Bahrain. The study found low awareness among the respondents with regard to the implementation of VAT in Bahrain. The results indicated that there is neither a positive nor negative perception towards VAT among the participants. Additionally, significant differences were found among the participants when they are grouped according to the level of education and income for awareness and perception towards VAT in Bahrain. Therefore, the researcher recommended the government of Bahrain and the policy-makers in Bahrain to bring more effort in designing a mechanism of spreading awareness among the individuals in Bahrain.

The impacts of introduction of VAT on the audit profession and economy in the UAE: Auditors’ perspective

Commencing 1st January 2018, Value Added Tax (VAT) was made effective in the UAE. The decision was made in light of the fall in oil prices and with the aim of diversifying the country’s revenue to non-hydrocarbon sectors. This paper examines the impacts of introducing VAT on the audit profession and the economy in the UAE. Unlike previous studies which have viewed this topic from a business or consumer perspective, this paper examines it from an auditor’s perspective. Given that this topic relates to a new policy and there isn’t much literature available on it, this study explores the auditors’ perceptions about the implications of this new policy on both; audit profession and the economy. This paper employs semi-structured interviews with auditors from both Big-Four as well as Non-Big-Four audit firms in order to collect data. This research, apart from being a timely and trending topic, may be useful to academicians, tax specialists, auditors, businesses and regulatory bodies. The findings of the study suggest that auditors are optimistic about VAT implementation in the UAE with respect to the growth in the economy in the long run. However, they have mixed perceptions regarding the audit profession and believe that there is no material impact on it due to VAT implementation.

Impact of vision 2030 on traffic safety in Saudi Arabia.

Background and objectivesRoad traffic accident (RTA) in the Kingdom of Saudi Arabia (KSA) is the first and major cause of death. The primary objective of this paper is to investigate the impact of Saudi Vision 2030 on road traffic safety. The Vision 2030 programs lead to the implementation of two crucial steps. The first step was to introduce value-added tax (VAT), and the second step was to increase fuel prices. The effect of these two steps on RTAs, injuries, and fatalities is determined and evaluated in this study.Research methodsThe data of RTAs, injuries, and fatalities in the last three decades before implementing VAT and before increasing fuel prices were collected and analyzed. A short-term effect of fuel prices was evaluated using the data of 3 months after each increase in fuel price. The results of RTA before the increase in fuel prices were compared with those of RTAs after the increase in fuel prices. Time series autoregressive and t-test were used to analyze the significant differences in the results.Results and discussionThe results show that RTAs have increased continuously during the last 30 years until the increase in fuel prices. A short-term effect of Vision 2030 and economic transformation were evaluated using RTA data before and after the increase in fuel prices. The remarkable decline in the number of RTAs, injuries, and fatalities after fuel prices increased was recorded.ConclusionDespite all the core issues implementing to reduce RTAs, such as traffic law enforcement, RTAs in the KSA increase and become the first cause of death in the country. Vision 2030 leads to an increase in gasoline prices and the implementation of VAT. The increase in gasoline prices contributes to a short-term decrease in RTAs, injuries, and fatalities by 22.4%, 21.9%, and 14.1%, respectively, while intermediate-term decrease in RTAs and road traffic fatalities is by 72892 and 1842, respectively. The decrease in RTAs may be attributed to the reduction in unnecessary trips and slower and careful driving by people to decrease fuel consumption. Statistical analyses performed using time series and t-test confirmed the significant effect of fuel prices on reducing RTAs.

Is Value-added Tax a Moneymaking-Machine for Developing Economies? Evidence from Ghana

Value-added tax (VAT) became a tax of choice recommended by the Breton Wood Institutions to boost tax revenue shares in developing countries. However, after several decades of VAT implementation globally, empirical evidence on its revenue effects is still inconclusive. The key question in this paper is: has the adoption of value-added tax (VAT) really made Ghana’s tax revenue mobilisation better off? This paper employs both the Fully Modified OLS and Autoregressive Distributed Lag (ARDL) approaches to test the moneymaking hypothesis for Ghana’s VAT. On the whole, the study fails to uphold the view that the VAT is a money-machine for Ghana. This implies that its adoption has not really brought about any dramatic improvement in aggregate tax shares. The study therefore recommends a reduction in the over concentration on VAT. An appropriate balance of tax-mix is therefore recommended. JEL classification: H25, E62, O23 Keywords: value-added tax, fiscal policy, government revenue, development policy

The Research on the Insurance Industry’s Tax Burden in China under the Background of Change from Business Tax to VAT

The insurance industry plays a key role in the national economy and modern society. The tax policy has a wide range of influences on the development of the insurance industry and the tax burden is the core of tax policy, which is directly related to the business performance and the balance of the insurance market. This paper estimates insurance companies’ effective tax rate of business tax and income tax by selecting insurance companies’ financial statement data from 2008 to 2015. We can see that the effective tax rate of insurance industry is facing a heavy tax burden especially for property insurance industry. By studying these problems, we should pay more attention to the tax burden on the insurance companies in the implementation of value-added tax in order to achieve the basic goal about change from business tax to VAT that does not increase but decreases slightly the tax burden and eliminates the double taxation. We also should solve the problems and challenges of insurance companies, facing change from business Tax to VAT, thus promoting the development of the insurance industry and enhancing its international competitiveness.

Energy price slump and policy response in the coal-chemical industry district: A case study of Ordos with a system dynamics model

We employ system dynamics method towards a coal-chemical industry district economy evolution model, using coal industry, the coal-chemical industry, their downstream industries, and the manufacture-related service industry. Moreover, we construct energy price and policy response scenarios based on Ordos’ management experience. The results show that the energy price slump had a negative impact on the overall economic development of the coal-chemical industry district, despite promoting non-resource industries. Furthermore, policies had different effects on the industry's output value and profit. In the long-term, developing alternative industries (AI) helps increase the industrial output value and profit. Decreasing value added tax (VAT) has immediate results and a distinctive effect on industrial short-term production value and profit, its long-term effect being limited. The effect of production limit (PL) on industrial profit is stronger than output value, and financial support (FS) is more conducive to improve the latter. However, coal mining and coal-chemical loan increases decrease the gross industrial profit level. Technology innovation (TI) has the best individual policy overall effect on production value and profits. Furthermore, the simultaneous implementation of PL, TI and AI can generate the synergy effect for each of them. And the simultaneous implementation of VAT and one or couple of other policies will generate the crowding-out effect both for VAT and other policies.

ICMS VERDE PARA A REDUÇÃO DO DESMATAMENTO AMAZÔNICO: ESTUDO SOBRE UMA EXPERIÊNCIA RECENTE

O presente artigo apresenta e analisa criticamente a recente instituição do ICMS Verde no Estado do Pará, dentro do contexto da busca pela redução desmatamento amazônico que determinou sua adoção. O ICMS Verde é visto como um vertente da política pública conhecida como ICMS Ecológico, que opera uma alteração nos critérios de redistribuição da parcela da receita obtida com a cobrança do Imposto sobre operações relativas à circulação de mercadorias e serviços – ICMS pertencente aos Municípios, com base em elementos ambientais. É considerada como uma aplicação do federalismo fiscal em prol do desenvolvimento socioambiental dos Municípios brasileiros. Após apresentar o histórico e as características gerais da política do ICMS Ecológico, bastante utilizada no Brasil, passa-se ao estudo da modelagem normativa do ICMS Verde paraense, analisando-se, por conseguinte, algumas consequências advindas da aplicação prática de tais normas, evidenciando os paradoxos observados em relação ao objetivo de redução do desmatamento amazônico expressamente almejado.

A Primer on Goods and Services Tax in India

India has witnessed substantial reforms in indirect taxes over the past two decades with the replacement of state sales taxes by Value Added Tax (VAT) in 2005 marking a watershed in this regard. Prior to VAT implementation, the tax structure was considered problematic primarily due to the “cascading effect of taxes”whereby an item is taxed more than once from the production to the final retail sales stage.To avoid this irrational tax structure, VAT was introduced so that that taxes are paid on the “value added portion” by each producer and the hurdles of the cascading effect are done away with. But shortcomings were also noticed in the VAT structure and efforts were made to further rationalise the system.The government has therefore recognised the need for harmonisation of goods and services tax so that both can be levied in a comprehensive and rational manner in a new taxation regime – Goods and Services Tax (GST).While presenting the Union Budget 2007-08, former Finance Minister P Chidambaram announced that GST would be introduced from April 1, 20102, in order to supplement the existing VAT system in India with a tax structure where goods and services tax can be unified in a comprehensive manner. The Empowered Committee of State Finance Ministers would work with the Central government to prepare a road map for its roll out.

An Assessment of the Revenue Impact of the State Level VAT in India

Revenue and Gross State Domestic Product data for 1993-94 to 2008-09 are used to study the revenue performance of the state Value-Added Tax (VAT) in India's 29 states. Both the direct revenue impact and the indirect impact through the VAT base were assessed. No indirect impact of the VAT on its base was found. The direct revenue impact of the VAT was found to be positive in two-thirds of sample jurisdictions. A positive impact on state's own revenue was however found only in two out of eleven major states and fifty percent of other states. The VAT may have had a negative revenue impact in two states. Since the VAT impact was assessed using dummy variables for the period during which the VAT was present, this implies that results actually reflect differences between VAT and pre-VAT periods rather than the impact of the VAT.To check robustness of direct impact results, the extent to which states 'gaming' the Centre to increase their compensation for a VAT revenue shortfall could have affected statistical findings on VAT performance was assessed and rejected. Whether or not in India as a whole states gaining revenue after VAT implementation could, in principle, compensate states losing revenue was also assessed and also rejected. Limited VAT revenue performance can partly be traced to large scale evasion given weaknesses in VAT administration identified in a 2009 performance audit. Implications of this study for the planned move to a goods and services VAT (from the current goods only VAT) are pointed out and a suggestion is made for a non-VAT goods and services tax which should be less vulnerable to tax evasion.

A general framework for measuring VAT compliance rates

Summary measures of Value Added Tax (VAT) compliance rates are valuable for identifying problem areas in VAT implementation. They are also essential for meaningful crosscountry and crosstime 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 nonresidents 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 13 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 individual contributions by the statutory and structural features of Vietnam's VAT regime.

Supply-side Economics in the People's Republic of China's Regional Context: A Quantitative Investigation of Its VAT Reform

The People's Republic of China (PRC) has now decided to shift its value-added tax (VAT) from production-based to consumption-based. This transition is currently piloted in the three provinces of the northeast PRC, and is expected to be extended to the whole country in the coming 2 or 3 years. Using a two-region dynamic general equilibrium model with overlapping generations, this paper investigates the macroeconomic and welfare effects of the VAT transition in PRC. The distribution effects between generations are also analyzed to get a sense of public opinion toward the reform. We put special emphasis on the pace of reform by analyzing the pre-announcement effects and the inter-regional impacts of tax reform that began in one pilot region. The simulation results suggest large welfare gains from the VAT transition. However, the pilot reform in the northeast provinces, which delays the national implementation of consumption-based VAT, would involve substantial transitional costs for the rest of the PRC.