Value Added Tax Rate Research Articles

Optimizing VAT threshold: The key to improving VAT performance

The low tax ratio in Indonesia is an issue often associated with suboptimal tax revenue performance. This study examines the role of the threshold for Value Added Tax (VAT), which is suspected to significantly influence the optimization of VAT revenue, while also exploring the effect of VAT rate and Gross Domestic Product (GDP) per capita. The study analyze data from member countries of the Organization for Economic Co-operation and Development (OECD) in 2022 using multiple linear regression methods. The results show that increases in the VAT threshold and VAT rate positively impact VAT revenue performance, while an increase in per capita GDP has a negative effect. A higher VAT threshold allows the country to focus on larger taxpayers, while the Micro, Small, and Medium Enterprises (MSMEs) benefit from reduced administrative burdens. These findings can serve as a basis for government evaluation in determining the appropriate threshold and VAT rates to enhance tax revenue performance optimally.

Практическое отражение в бухгалтерском учете операций, облагаемых по нулевой ставке налога на добавленную стоимость: влияние внедрения раздельного учета на бухгалтерскую отчетность организации

The article discusses the specifics of applying the zero value-added tax rate, taking into account the changes that occurred in 2024 in the order of its application in the implementation of relevant operations. In the paper, the author substantiates that if earlier the 0% rate was primarily an "export" rate, now the list of activities subject to taxation at this preferential rate is increasing. Consequently, the number of organizations that will have to implement accounting methods based on the requirements of regulatory tax authorities is also increasing, which will have a significant impact on the established accounting and tax accounting procedures within the company.

Dampak Penerapan Perubahan Tarif PPN Menurut UU HPP No. 7 Tahun 2021 pada PT. POV

Tax regulations in Indonesia have undergone many changes by harmonizing tax regulations with the hope of increasing stable and balanced economic growth and recovery after covid-19 by increasing the VAT rate to 11% as regulated in the HP law number 7 of 2021.The purpose of this study is to determine the possible impact on PT POV related to the change in Value Added Tax rate. The qualitative method is the method that has been applied to conduct this research, which uses a descriptive approach by explaining a phenomenon that occurs and describing events in the field. Data collection techniques are obtained through interviews and documentation. The results of this study indicate that changes in the amount of VAT rates cause adjustments to the system by KJA in managing VAT at PT POV, namely related to e-invoicing and Microsoft Excel applications. Changes in VAT rates also affect sales made by PT POV which have decreased significantly from the March 2022 tax period before the tax rate has changed to 11%. Researchers provide advice to future researchers to conduct research with a wider object related to the impact of changes in VAT rates.

A model for VAT standardization in Nigeria: Enhancing collection and compliance

This paper explores a proposed model for the standardization of Value-Added Tax (VAT) in Nigeria, aiming to enhance both collection efficiency and compliance. VAT is a significant revenue source for Nigeria; however, inefficiencies in its collection and compliance present challenges to economic development. The study addresses these issues by proposing a comprehensive model that integrates global best practices with local context. The proposed model includes the uniform application of VAT rates across sectors, standardized invoicing and documentation procedures, and the adoption of advanced technological solutions for VAT monitoring and reporting. By standardizing VAT procedures and leveraging technology, the model seeks to reduce discrepancies and errors, streamline compliance, and enhance transparency. The methodology involves a thorough review of existing literature, comparative analysis of VAT systems in other countries, and case studies of past VAT standardization attempts in Nigeria. The study uses qualitative and quantitative data to evaluate the effectiveness of the proposed model and its potential impact on VAT collection and compliance. The findings indicate that implementing the model could significantly improve VAT collection efficiency and compliance rates, contributing to a more robust and transparent tax system. The paper concludes with recommendations for policymakers on adopting and refining the proposed model, along with suggestions for further research to address ongoing challenges in VAT administration. Keywords: Model, VAT, Standardization, Nigeria, Enhancing Collection, Compliance.

Enriching wind power utility through offshore wind-hydrogen-chemicals nexus: Feasible routes and their economic performance

The offshore wind-hydrogen strategy is crucial for achieving carbon neutrality, yet faces challenges like wind power variability, surplus hydrogen, and elevated costs. Recently, linking offshore wind, hydrogen, and chemicals is proposed to address these challenges. However, there is a lack of a comprehensive techno-economic analysis of this nexus. This study, as one of the first attempts, performs the techno-economic analysis of 8 feasible offshore wind-hydrogen-chemical nexus routes, in which factors of technology, economics, and financial policy are considered. The research indicates that Route 7, which incorporates offshore wind power utilizing proton exchange membrane technology for hydrogen production and blends it with natural gas on offshore platforms, demonstrates the most cost-effective outcome. The key factors influencing the cost reduction of these routes encompass the green hydrogen price, capital costs, internal rate of return, electricity price, value-added tax rate, and loan ratio. Among these, the green hydrogen price is the primary determinant influencing the cost of green products. If the price of green hydrogen decreases to 2.19 USD/kg, green synthetic ammonia can meet the current standard of 605.47 USD/t. Finally, the results can provide important reference to support stakeholders for seeking cost-effective routes of offshore wind-hydrogen-chemical nexus in China and other regions.

Economic Analysis of Law in Increasing Value Added Tax Rate Policy

Economic Analysis of Law in Increasing Value Added Tax Rate Policy

Improving VAT collection efficiency through policy design and compliance improvement and moderated by control of corruption

Value Added Tax (VAT) is increasingly relied upon by an increasing number of economies, as shown by the global trend of increasing standard tax rates, but raises questions about the efficiency of its levy. This study revisits the determinants of VAT collection efficiency by using the C-efficiency ratio approach. Using a dataset of countries in the SEAO region (East Asia, Southeast Asia, and the Pacific), this study was performed quantitatively using a panel data regression analysis. The results show that the government effectiveness index is unlikely to be an appropriate proxy for the compliance gap. In terms of the policy gap, policy changes by increasing the standard VAT rate might reduce the C-efficiency ratio, whereas lowering the VAT registration threshold might not improve the C-efficiency ratio. However, the control of corruption index as a moderating variable could antagonize the negative effect of the VAT standard rate on the C-efficiency ratio. This finding corroborates previous studies and encourages discussion to find variables that better measure compliance and policy gap.

TAXATION SYSTEMS OF UKRAINE AND POLAND: COMMON AND DIFFERENT FEATURES

The article provides a comprehensive study of the common and distinctive features of the taxation system in Ukraine and Poland, focusing on indirect taxes, namely: value added tax (VAT), excise tax, and customs duties. Peculiarities of taxation of the main direct taxes: personal income tax (PIT) and corporate income tax (CIT) have been studied. The purpose of the study is to determine the common and distinctive features of the construction of the tax systems of Ukraine and Poland, the functioning of the main budget-forming taxes, their rates, the conditions for applying tax benefits, as well as the possibility of implementing foreign experience in order to improve the domestic taxation system. The research methodology included a comparative analysis of legislative acts, statistical data and practical aspects of the functioning of the tax systems of Ukraine and Poland. The results of the study showed that although both countries apply similar types of indirect taxes, there are significant differences in rates and approaches to their administration. It was found that the VAT rate in Poland is 23%, while in Ukraine it is 20%, and a progressive scale of personal income taxation is applied at rates from 17% to 32%, in Ukraine there is a fixed rate of 18%, with respect to the tax on profit of enterprises, in Poland the standard rate is 19%, while in Ukraine it is 18%. The authors of the article also found that the Polish tax system is more stable and predictable, which contributes to a better investment climate and economic growth. In Ukraine, tax legislation is characterized by frequent changes and complexity of administration, which creates additional challenges for business. The findings of the study emphasize the importance of reforming the tax system of Ukraine in order to increase its transparency, stability and efficiency. In particular, it is recommended to simplify tax administration procedures taking into account Poland experience and harmonize tax legislation to European standards.

Increasing Value Added Tax (VAT) Rates on Community Purchasing Power and Economic Stability

Added Tax (VAT) already become money maker for the country. VAT rates experienced enhancement from 10% to 11% as of April 1, 2022. This naturally raises pros and cons from various society. Ascension tariff tax the in accordance with stated mandate in rule about Harmonization Regulation Taxation. However, for raise something tariff tax in the middle decline Indonesian economy as impact from This Covid-19 pandemic become question. Study this is very urgent Because can made evaluation for government specifically Directorate General of Taxes (DJP) for policy will made in the future, above evaluation the government can innovate for meet state revenue targets from sector taxation. Study this also contributes in educate must tax to get it follow future VAT policy, with hope state revenue will increase. Study this aim for analyze about influence enhancement VAT rate against Power buy society and stability country's economy. Analysis techniques used is an analysis technique quantitative with Analysis Simple Linear Regression. Research result mention that enhancement VAT rates matter positive and significant to Power buy society and stability economy.

The effect of enterprise quality management on innovation incentives in enterprises —— based on the reform of China's value-added tax system

This article will analyze the incentive effect of the value-added tax rate reduction policy on enterprise innovation from the perspective of enterprise quality management. The research results indicate that: (1) the reduction of value-added tax rate has an incentive effect on the innovation activities of enterprises; (2) There is a positive moderating effect of enterprise quality management on the reduction of value-added tax rate and the innovation and research and development activities of enterprises; (3) The reduction of value-added tax rate has a more significant incentive effect on innovation in the eastern region of China, state-owned enterprises, and relatively larger enterprises.

Pengaruh Kenaikan Tarif PPN, Literasi Pajak, Dan Literasi Keuangan Terhadap Potensi Penerimaan Pajak Pertambahan Nilai (PPN) Pada Kecamatan Ilir Timur 1 Kota Palembang

This study aims to examine the effect of VAT Rate Increase, Tax Literacy, and Financial Literacy on Potential Value Added Tax (VAT) Revenue. This study uses primary data by distributing questionnaires to 398 people in the Ilir Timur I district of Palembang city. The data were analyzed using multiple linear regression analysis, assisted by IBM SPSS Statistics 25 software. The results of this study indicate that the increase in VAT rates and tax literacy partially affect the potential for VAT revenue. However, financial literacy partially has no effect on potential VAT revenue. The increase in VAT rates, tax literacy, and financial literacy simultaneously affect the potential for VAT revenue.

Effect of Value-Added Tax (VAT) on the Demand for Tourism Services: Evidence from Tanzania

This study examines the influence of Value-Added Tax (VAT) on the likelihood of tourists visiting Tanzania. The study employed a mixed approach by collecting and analyzing both quantitative and qualitative data. The study applied simple random and judgmental sampling techniques to select 110 respondents from the targeted population. The research used questionnaires, interviews and observation to collect primary data. The study conducted descriptive and regression analysis (binary logit model) to estimate the likelihood of tourists visiting tourist sites in the country. Descriptively, the findings reveal that 83 per cent of the respondents were affected by the high prices charged on tourism services like transport, accommodation and meals. 95 per cent of the respondents perceive the 18 per cent VAT charged on various tourism services as relatively high. The findings imply that a considerable number of visitors are sensitive to the rate of VAT imposed on tourism services. 90 per cent of the respondents were comfortable with the infrastructure in different tourist sites (national parks and game reserves) in the country. 69 per cent of the tourists are attracted to visit Tanzania due to the peace and security status in the country. Moreover, 97 per cent of the tourists visited the country because of environmental conservation and fighting against poaching efforts. As per the findings of the binary logit regression analysis, the study found that VAT, education level, price, infrastructure, peace and security, and destination marketing have significant effects on determining the likelihood of tourists visiting Tanzania.

Adjustments in VAT rates and business innovation: Empirical insights from China

China aims to alleviate corporate financial pressures and encourage high-quality economic development through initiatives such as value-added tax (VAT) rate reform. This study employs the difference-in-difference (DID) approach to investigate the effect of the 2017 VAT rate reform on corporate innovation, taking the reform as a quasi-natural experiment. We find that the VAT rate reform has significantly promoted firm innovation and that increasing profitability serves as the primary channel. The innovation-promoting effects of the VAT rate reform are most prominently seen in a number of different types of businesses: those with lower intermediate input ratios, those operating in less monopolistic industry environments, state-owned enterprises, non-exporting businesses, entities with limited financial resources, and companies located in non-eastern China. This study makes a case for tax reforms in other nations as well as a reference for China's market-oriented reform and further VAT reform.

A Comparative Evaluation of Fiscal Stabilization Strategies during the Covid-19 Pandemic with Germany as a Reference Point

Abstract We provide a comparative evaluation of fiscal stabilization strategies during the Covid-19 pandemic. For this purpose, we use Germany’s temporary value-added tax (VAT) rate reduction as a reference point. We construct a credible counterfactual for Germany in a two-step procedure. First, we carry out a careful pre-selection of the donor pool countries to obtain a control group that is highly similar to Germany regarding important post-treatment characteristics. Second, we apply a reweighting scheme on the pre-selected donor countries. The synthetic control group only differs from Germany in the way that it did not implement the temporary VAT rate reduction. Our results indicate that the German VAT cut policy and partial VAT reductions in other countries were relatively ineffective in stimulating consumption with regards to their costs when compared to other measures such as (targeted) direct cash transfers (e.g. implemented in Canada, Denmark, Japan, and the United States). We attribute this to the fact that direct cash transfers are more comprehensible, salient, and actionable, in particular, in a dynamic environment with high uncertainty induced by unclear future economic prospects.

THE EFFECT OF CHANGES IN VALUE-ADDED TAX RATES (VAT) AND COST OF GOODS SOLD (COGS) ON SALES TURNOVER AT PT. VCS

The increase in Value Added Tax (VAT) rates and the rise in Cost of Goods Sold (COGS) significantly impact the business strategy and profitability of the company. The research aims to examine the impact of the increase in VAT rate and changes in the Cost of Goods Sold on PT's business strategy and profitability. VCS. The method used is quantitative research using PT's sales data. VCS from 2018 to 2022, as the population was selected through a purposive sampling method. Data analysis was conducted using SPSS version 27. The research findings indicate that the increase in the value-added tax rate significantly impacts PT's sales revenue. VCS, while the increase in Cost of Goods Sold does not considerably affect the company's Sales Revenue

Assessing the Impact of Value Added Tax (VAT) On Government Revenue in Zambia

This research aimed to assess the impact of Value Added Tax (VAT) on government revenue collection. The study employed a mixed methods research design, which combines both qualitative and quantitative methodologies. The study focused on a population of 500 management-level employees at the Zambia Revenue Authority and Ministry of Finance. Seeing that the study was heavy on qualitative approach and had specific type of cadre to provide the necessary information, a sample of 30 respondents was utilized which was purposively sampled. The secondary sources on the other hand mainly involved published documentation such as reports obtained from Zambia Revenue Authority official website and journals that provided the conceptual framework and a definite meaning to the topic. Regarding the effect of VAT on Government revenue, the study revealed that an increase in VAT rate may lead to higher VAT revenue, assuming a stable level of compliance. With regard to effect of VAT on consumer behavior, it was established that when VAT rates are elevated in Zambia, the prices of a wide array of goods and services subject to VAT increase accordingly, hence consequently, higher VAT rates can drive consumers to opt for saving or investing their money rather than immediate spending. This may simultaneously lead to a reduction in consumer spending, potentially impeding economic growth. As regards to ascertaining measures to address challenges related to VAT collection, findings indicated that effectiveness of VAT is contingent upon addressing the challenges inherent in VAT collection, optimizing VAT rate policies, and adapting the system to the country's unique economic context. The study offers several recommendations, including: improving tax administration through the Zambia Revenue Authority (ZRA); combating tax fraud and evasion; simplifying VAT regulations; enhancing taxpayer education and awareness; carefully considering exemptions and thresholds; and implementing monitoring and evaluation mechanisms for VAT revenue. Further study is recommended to explore the informal economy's role in VAT collection in Zambia and its implications

Effectiveness of Value Added Tax (VAT) analysis in Nepal

This research aims to assess the evasion of the Value added tax in Nepal. The specific objectives are: evaluating the VAT evasion on the Nepalese economy; the study follows explanatory research designs. The primary data is collected by conducting field survey using pre-structured questionnaires. Altogether 400 respondents from the four categories are interviewed: 100 from VAT payers, 100 from VAT administration, 100 from VAT experts and 100 from business community all over the country, respondents were requested to indicate their degree of conformity with specified statements using 5-point scale.
 The results of the regression model shows that the expected sign of the variable included in the model as per priory expectation. VAT rate complication and complex legal provisions are negatively related, while administrative efficiency and incentive for VAT collection are positively related with VAT collection efficiency. The computed F-statistic is also higher than table value at 95% level of significance. The coefficient of VRC is 0.08932, meaning that the change in 1% on VAT rate will decreases in VAT effectiveness by 0.089 percent point. The regression model shows that the t-statistic 1.135 and p-value 0.2569>0.05 not significant at 5%. Therefore, the null hypothesis is accepted, indicating that VAT rate has no significant impact on VAT effectiveness.

TAXATION OF CENTRALISED DRINKING WATER SUPPLY SERVICES WITH VALUE-ADDED TAX

The scientific article is devoted to the issue of reducing the tax burden on such a socially important service as a centralised drinking water supply. The study has determined that the service of centralised drinking water supply is an essential component on the way to achieving universal and equal access to safe and affordable drinking water for everyone in Ukraine. The research shows that the legal form of the utility company as a service provider is the most common for providing water supply services. This form best allows local self-government bodies to conduct their tasks and obligations in the drinking water supply. The study revealed the main features of the water supply service. We established that the service has great social significance and that its main task is not to make a profit but to provide consumers with quality drinking water in sufficient quantity and at an acceptable cost level. Despite its significant social value, the drinking water supply services are subject to value-added tax at the usual rate of 20%. The study found that the drinking water supply services generate significant added value, which results in service providers paying substantial amounts of value-added tax to the state budget. We concluded that such a situation does not correspond with the spirit of providing the population with drinking water and is unacceptable for a heavily subsidised service with many chronic problems, including high levels of deterioration of water supply infrastructure and low coverage of rural areas with centralised water supply. Further, we carried out an analysis of the legislation of the European Union regarding the taxation of water supply services with value-added tax. We determined that most countries of the European Union use the practice of applying a reduced value-added tax rate for the taxation of water supply services. The obtained results justify the further necessity to study the issue of making changes to the tax legislation of Ukraine to apply a reduced value-added tax rate or complete exemption from taxation of the value-added tax for centralised drinking water supply services. Keywords: value-added tax, drinking water supply, utility company, tariff, cost price, reduced rate.

Towards true prices in food retailing: the value added tax as an instrument transforming agri-food systems

AbstractCurrent crises (i.e., climate crisis, COVID-19 pandemic, Russian invasion of Ukraine, and the resulting energy and food shortages) indicate the need for robust, and sustainable supply chains with regional food production and farmland to secure food supply in the European Union (EU). Recent research shows that organic food is more resilient to supply chain disruptions and price fluctuations. In this context, we examine an approach for the sustainable and resilient transformation of agri-food networks: can an adaptation of value added tax (VAT) levels work as a financial incentive to amplify resilient agricultural practices and sustainable dietary patterns? Within the setting of the amendment of the European framework directive on the use of VAT in 2022, we model the effects of adapting the current German VAT system by (1) reducing VAT on organic vegetarian food to 0% and (2) raising VAT on conventional meat and fish to 19%. Based on historical data on organic sales shares and price elasticities, we project sales shares differentiated by product group for each scenario. Then, we calculate expected tax revenues, changes in consumption patterns, and arising total external climate costs in Germany for both scenarios. Our results show that the overall consumption share of organic food would increase by 21.83% due to the modeled VAT reform compared to the status quo. Despite the VAT reduction to 0% on organic vegetarian products, the measure would yield €2.04 billion in extra tax revenues in Germany per year due to the increased taxation on conventional meat products. We find that annual environmental costs of €5.31 billion can be avoided as a result of lower external climate costs of organic and vegetarian food. Therefore, adjusting VAT rates in the food market can be a political instrument to drive organic food consumption and reduce animal livestock. This supports re-territorialization of agriculture and a more sustainable and resilient European food supply.

Value‐added Tax and Leverage: Evidence from China's Value‐added Tax Rate Reform

AbstractThis paper uses China's value‐added tax (VAT) rate reform as a quasi‐natural experiment to identify the impacts of VAT rate shocks on corporate financial leverage. The results indicate that the reform reduced corporate total leverage significantly. There was a decrease in short‐term leverage, but long‐term leverage showed no significant change. These results remained robust across a series of robustness checks. Mechanism analysis shows that increasing profitability and improving cash flows acted as intermediary channels for the reform's impact on leverage. The reform also contributed to the mitigation of the asset–liability mismatch problem and the reduction of debt risk, while having no apparent impact on corporate investments. Finally, enterprises with more elastic demand and those with lower intermediate input ratios were affected most by the deleveraging effect of the VAT rate reform. This study suggests how the VAT rate cut shaped corporate capital structure. It thus helps to explain the economic consequences of VAT rate shocks.