Value-added Tax Research Articles

VAT On Imported Services In Africa – Why Consumption And Reverse Charge Concepts Remain Crucial

As exports and imports of services continue to grow globally, Value Added Tax (VAT) on imported services has also taken a centre stage in most countries. Unlike goods, determining the place of consumption for services is often a contentious issue and a source of VAT controversy in many countries. In resolving these controversies, African courts, with a few exceptions, have established a visible criterion for determining the place of consumption of cross-border service transactions that aligns with the OECD International VAT/GST Guidelines. Where consumption is not at issue, most African countries have opted to deploy a reverse charge mechanism blended with a “register and comply” requirement for the foreign supplier in order to administer and collect VAT on the foreign supply (imported service). In this article, the author argues that African countries should deploy a reverse charge mechanism for B2B transactions and only use a “register and comply” requirement by non-residents for B2C services.

Gendered Taxation: IMF Tax Advice and the Unintended Disempowerment of Women

Case research points to the gendered effects of the value added tax (VAT), which may particularly disadvantage women by crowding out their economic participation. A key driver of VAT introductions has been the International Monetary Fund (IMF). To counterbalance of-payments woes, IMF advice for cash-stripped countries has frequently focused on shifting toward broad-based consumption taxes while lowering trade taxes and corporate income taxes. We expect this tax policy advice – while ostensibly gender-blind – to contribute in practice to a deterioration in women’s socioeconomic well-being. To test this hypothesis, we construct a panel dataset for 147 countries from 1980 to 2016 and estimate the effect of IMF programs on women’s economic participation, education and health. Accounting for selection effects, we find that women’s life chances deteriorate relative to men’s if a country undergoes an IMF program with tax conditionality. We corroborate these findings to demonstrate the mechanism underlying these effects by showing a negative effect of IMF-induced de jure VAT adoption on women’s life chances. We provide complementary individual-level evidence from the World Values Surveys based on 98 countries from 1981 to 2019. We show that during an IMF program with tax conditionality, women are significantly less satisfied with home life and report more material hardships. Our results provide evidence of the potential for unintended consequences of IMF revenue prescriptions for women, supporting calls for increased attention to gender-responsive budgeting.

Analysis of the Impact of Value-added Tax Reform on the Financial Cost Structure of Enterprises

Analysis of the Impact of Value-added Tax Reform on the Financial Cost Structure of Enterprises

Analisis Penerapan Pajak Pertambahan Nilai pada PT. Quantum Mandiri International

The research was conducted using a mixed method between quantitative and qualitative to determine the relationship between inflation and Value Added Tax (VAT). In addition, this research was also conducted to find out how the application of VAT in terms of calculation, payment and reporting stated in the company's Periodic Notification Letter (PNL). This is done to avoid tax sanctions, one of which is the receipt of a Tax Collection Letter (TCL). The independent variable uses inflation and the dependent variable uses VAT. This study uses data on inflation and VAT reported as much as 36 data with the period 2021-2023. Simple linear regression analysis is used in the data processing method and processed using statistical data processing tools. The results of existing data processing show that inflation has a positive impact on VAT. In the February 2021 and March 2021 VAT Periodic Tax Returns there are still corrections caused by errors in making Tax Invoices (TI), resulting in delays in payment and reporting of VAT NPL. Due to this delay, it resulted in the receipt of STP from the Tax Service Office (TSO) and a response has been made by the company to the TCL that has been received. For the April 2021 to December 2023 VAT NPL, the company has paid and reported VAT so that no TCL has been received from the TSO.

VAT Reform and Labor Cost Stickiness: Evidence from China

ABSTRACT Rising labor costs have weakened product competitiveness and posed challenges to economic growth. We investigate the effects of a tax cut in alleviating labor cost stickiness by exploring China’s shift from a production-based to a consumption-based value-added tax (VAT) between 2004 and 2009. Using a multi-period DID model and data from Chinese A-share-listed firms for 2003 through 2011, we find that the VAT reform significantly reduced firms’ labor cost stickiness and increased their ability to manage employment adjustment costs by providing wage flexibility. The stickiness of labor costs declined most for firms characterized by labor-intensive operations, situated in more market-oriented areas, and with higher growth opportunities. Our findings show that VAT reform has had a real effect on firms by alleviating labor cost stickiness.

Assessing the Financial Effects of Value-Added Tax (VAT) on University Students' Purchasing Behavior in Oman

Assessing the Financial Effects of Value-Added Tax (VAT) on University Students' Purchasing Behavior in Oman

Changes in price, income and e-cigarette affordability for young people in the USA from 2015 to 2021

BackgroundE-cigarette products are the most popular tobacco/nicotine product used among youth and young adults in the USA. While emerging research has shown that e-cigarette taxes increase their price, no study to date has examined e-cigarette tax burdens nor their affordability for youth and young adults.MethodsUsing real (2021 US dollars) prices per mL of e-liquid data from NielsenIQ and annual real (2021 US dollars) personal income data from Integrated Public Use Microdata Series, we calculate relative income prices and examine average annual percentage changes in affordability using Joinpoint trend analysis from 2015 to 2021. In addition, we use tax data to calculate e-cigarette tax burdens as a percentage of price per 1 mL of e-liquid.ResultsIn all states analysed, tax burdens increased from 2015 to 2021. E-cigarette prices decreased considerably from 2019 to 2021; in 2021 the real (2021 US dollars) average price of 1 mL of e-liquid was US$4.45. E-cigarettes on average became more affordable for all age groups and states; however, e-cigarettes tended to be less affordable in states with ad-valorem tax structures. On average, 16–17-year-olds needed 31% of their annual income to purchase 100 mL of e-liquid, whereas 18–19-year-olds, 20–24-year-olds and 25–34-year-olds needed 9%, 3% and 1%, respectively.ConclusionsE-cigarettes have become more affordable for young people, but less so in states with ad-valorem tax structures. Policy efforts should focus on reducing e-cigarette affordability, especially for youth, through tax-induced increases in e-cigarette prices to levels high enough to outpace income growth.

Making Tax Smart: Feasibility of Distributed Ledger Technology for Building Tax Compliance Functionality to Central Bank Digital Currency

The latest advancements in distributed ledger technology (DLT) and payment architectures such as the UK’s New Payments Architecture present opportunities for leveraging the hidden informational value and intelligence within payments. In this paper, we present Smart Money, an infrastructure capability for a central bank digital currency (CBDC) which enables real-time value-added tax split payments, oversight, controlled access, and smart policy implementation. This capability is implemented as a prototype called Making Tax Smart (MTS), which utilises the open-source R3 Corda DLT framework. The results presented herein confirm that it is feasible to build an MTS capability which is scalable and co-exists with the current payment systems. Smart Money CBDC has the potential to mobilise payments data, transforming the role of money from a blunt instrument to a government policy sensor and actuator without disrupting the existing money system. DLT, smart contracts, and programmable money have a crucial role to play with benefits for government departments, the economy, and society as a whole.

Analysis of School Financial Management in the Context of Tax Accounting: A Case Study at SMP Negeri 3 Hilisalawa'ahe

Schools as educational units manage their finances independently and are bound by tax obligations. Therefore, knowledge of tax accounting is very important in planning and implementing school activities and budgets. School principals, treasurers and BOS teams must understand tax regulations related to school revenues and expenditures; such as income tax (PPh), value-added tax (VAT) and local tax. With the above premise, the author is interested in conducting research on School Financial Management in the Context of Tax Accounting: Case Study at SMP Negeri 3 Hilisalawa'ahe. The purpose of this study is to describe financial management at SMP Negeri 3 Hilisalawa'ahe, analyze the suitability of its management for tax accounting provisions, identify the obstacles faced by the financial management team of SMP Negeri 3 Hilisalawa'ahe and formulate solutions to overcome these obstacles. This research uses a qualitative approach, which is a research procedure that produces descriptive data in the form of speech or writing and observable behavior of the person (subject) itself. The data collection methods used are observation, interviews, and document review with the object of research is the financial management of SMP Negeri 3 Hilisalawa'ahe. Based on the results of the study, it was found that the Financial Management and Reporting of SMP Negeri 3 Hilisalawa'ahe is in accordance with the general provisions and procedures of taxation and there are no obstacles faced in the financial management of SMP Negeri 3 Hilisalawa'ahe because the management team is in accordance with the professional field and understands tax regulations. Translated with DeepL.com (free version).

Effect of Electronic Tax Invoice Management System on Value Added Tax Compliance Among Tented Camps in Narok County, Kenya

Purpose: Value Added Tax (VAT) compliance is a critical aspect of revenue collection for governments worldwide; however, it has encountered various challenges, the most prevalent being verifying input tax claimed by taxpayers when filing VAT returns. The main objective was to examine the effect of electronic Tax Invoice Management System on Value added tax compliance among tented camps in Narok County. The theory that supports the study was Diffusion of Innovations Theory. Methodology: The study employed explanatory research design, with a target population of 150 tented camps in the Masai Mara National Reserve, out of these, 122 respondents successfully completed and returned the questionnaires, resulting in a response rate of 81.3%. The data was collected through a structured questionnaire. Results: The study found that ETIMs positively and significantly affect VAT compliance β =0.236 p-value =0.012<0.05. Conclusion: The study recommended that The KRA should enhance the Electronic Tax Invoice Management System (ETIMS) to improve VAT compliance among tented camps in Narok County. Future research should be conducted on the effects of taxpayer behavioural factors on VAT compliance.

Probability of Detection and Value Added Tax Compliance among Small and Medium Enterprises in Westlands Sub County, Nairobi, Kenya: Moderating Effect of Tax Service Quality

Purpose: Value-added tax compliance has remained a challenge, especially when it comes to SMEs operating in Kenya. The high level of informality of this sector provides an incentive for most of the SMEs to evade payment of VAT, a situation that has constrained the amount of tax revenues available to finance fiscal budget. This study aimed to determine the moderating role of tax service quality on the relationship between probability of detection and value added tax compliance among small and medium enterprises in Westlands Sub County, Nairobi, Kenya. Methodology: The study adopted an explanatory design targeting 751 SMEs operating in Westlands Sub- County, Nairobi, Kenya as registered by Nairobi City County. The sample frame was the list of SMEs in Westlands Sub- County that is available in Nairobi City County. The sample size was 261 owners of the said SMEs who were stratified into four categories based on the nature of undertaking of their business and a representative sample from each of these categories was drawn. Gathering of information was by use of a questionnaire. To analyze the collected information, descriptive statistics like means and standard deviations as well as multiple regression analysis was adopted. Results: Regression of coefficients showed that probability of detection had a positive and significant effect on VAT compliance of SMEs (β=0.358, p=0.000). The findings also revealed that tax service quality moderates the relationship between probability of detection and value added tax compliance among small and medium enterprises (β= 0.086, ρ<0.05). Conclusion: The study concluded that probability of detection had a positive and significant effect on VAT compliance of SMEs. In addition, the study concluded that tax service quality moderate the relationship between probability of detection, on value added tax compliance among small and medium enterprises in Westlands Sub County, Nairobi, Kenya. KRA should increase the rate probability of audit detection by coming up with new mechanisms of audit detection thus enhancing VAT compliance of VAT amongst the SMEs. The government should strive to provide SME owners in Westlands Sub County, Nairobi, with services that are of high standards for example at the tax stations as clearly stated in the corporate plan to reduce the need for spending costs to hire skilled persons such as tax consultants.

Implementation of destination principle VAT on service exports in Indonesia: Analysis of PMK-32/PMK.010/2019 based on OECD guidelines

Value Added Tax (VAT) is applied based on two fundamental concepts: the origin principle and the destination principle. Under the origin principle, taxes are levied where goods or services are produced, while under the destination principle, taxes are imposed where the goods or services are consumed. This research focuses on analyzing how the destination principle is implemented in the imposition of VAT on service exports, as governed by Regulation of the Minister of Finance No. 32/PMK.010/2019 regarding the limitations on taxable activities and types of services whose exports are subject to VAT. The OECD International VAT/GST Guidelines are used as a reference in this analysis to reduce distortions in international trade and minimize the risk of differences in tax collection principles between countries. The results of the study show that PMK-32/PMK.010/2019 has implemented the destination principle in accordance with the OECD guidelines, but there are still several challenges in its implementation, especially in ensuring tax neutrality and legal clarity in cross-border transactions. This study provides important insights for policymakers in improving tax regulations to support sustainable and equitable economic growth.

Consideration of the Application and Risk Prevention of VAT Tax Rebate Policy for Construction Enterprises at the End of the Period

The “Announcement on Deepening the Value-Added Tax Reform” clearly outlines the preferential policy regarding incremental retention tax rebates. With the advancement of value-added tax (VAT) reform and the improvement of VAT legislation in China, VAT tax planning for construction enterprises, particularly related to retained tax credits, has become routine. This paper, focusing on the characteristics of construction enterprises, analyzes VAT retained tax credits at the end of the period, the status of tax refunds, practical issues, and related processes, and offers suggestions for policy application and risk prevention.

ANALISIS PROSEDUR KELEBIHAN PEMBAYARAN PAJAK PERTAMBAHAN NILAI PADA KANTOR PELAYANAN PAJAK PRATAMA MEDAN BARAT

This study aims to determine the process of resolving value added tax (VAT) overpayments and find out the obstacles faced by taxable entrepreneurs in submitting value added tax overpayments at the West Medan Pratama Tax Service Office. The sample in this study is Value Added Tax Overpayment Data for 2019-2023. Data collection techniques use interview and documentation techniques. The analysis method used is descriptive. Based on the results of this study, it shows that there are still many taxpayers who apply but do not complete the documents according to the tax overpayment procedures requested by KPP Pratama Medan Barat, as well as the implementation of tax overpayment procedures by KPP Pratama Medan Barat in accordance with the procedures of the applicable laws and SOPs. The obstacles faced by the West Medan Pratama KPP are that in practice, starting from the examination until the approval of the application, the level is quite difficult and the administrative data is incomplete, as well as evidence that shows that there is an overpayment of tax, the address is incomplete and the taxpayer has difficulty contacted.

COMPLIANCE TRIBUTÁRIO INTERNACIONAL: DESAFIOS E ESTRATÉGIAS NA GESTÃO DO IVA E O USO DE PARAÍSOS FISCAIS

The complexity of the global fiscal landscape, marked by the variety of laws, regulations, and management and corporate strategies of multinational corporations. This article investigates international tax compliance, focusing on its relationship with Value Added Tax (VAT), tax havens, and tax law. The objective is to assess how compliance with tax obligations in multiple jurisdictions impacts multinational companies, particularly with regard to VAT, whose complexity requires rigorous management to avoid penalties. Using a qualitative approach, the study analyzes legislation, international treaties, and business practices, highlighting the challenges of harmonizing tax efficiency with legal compliance. The results indicate that the use of tax havens, although offering tax benefits, exposes companies to high risks due to increasing global regulatory scrutiny. Corporations must act cautiously when designing their global activities, ensuring that their tax planning strategies are not seen as abusive, illegal, or evasive, to avoid future problems. It is concluded that an effective tax compliance strategy, aligned with international tax law, is essential to mitigate risks and ensure business competitiveness in a dynamic and strictly regulated global environment.

Exploring the Role of AI in Improving VAT Reporting Quality: Experimental Study in Emerging Markets

In recent years, artificial intelligence has increasingly been interesting for its role in improving accounting practices. This research investigates whether there is a significant difference in value-added tax (VAT) reporting quality between traditional methods and those assisted by artificial intelligence (AI) in emerging markets. The experiment introduces an AI intervention using ChatGPT-4 to analyze data for accounting errors. The results demonstrate that AI-assisted reporting significantly improves reporting quality, as the AI effectively identified accounting errors that were missed in traditional reporting. This study makes a valuable contribution by providing novel, practical insights into the role and capabilities of AI in tax reporting, employing a rarely used experimental methodology to explore this topic.

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.

The Influence Of Digital Marketing And VAT (Value Added Tax) Literacy On Consumer Purchasing Behavior

This study aimed to examine the impact of digital marketing and VAT (Value Added Tax) literacy on consumer purchasing behavior. It investigates how marketing through digital media, along with VAT literacy, can affect respondents as consumers across both online and offline platforms. The research employs a quantitative approach, utilizing primary data collected through questionnaires and multiple linear regression techniques. The population consists of 387 students from “Universitas Advent Indonesia,” who graduated in 2023, with a sample of 151 students from the economics faculty. The sampling method used is probability sampling, resulting in 82 respondents. The independent variables are digital marketing and VAT (Value Added Tax) literacy, while the dependent variable is consumer purchasing behavior. This study utilizes SPSS 27 software. The findings indicate that digital marketing and VAT literacy, when considered together, influence consumer purchasing behavior. Additionally, the results of the study shows that effective digital marketing strategies can strengthen consumer relationships and enhance loyalty, making them essential in today’s digital age. However, VAT literacy has little impact on purchasing behavior since the surveyed respondents already have high VAT literacy.

VAT pass-through and competition: Evidence from the Greek islands

We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we investigate how changes in VAT rates are passed through to consumers in islands with different market structure. We show that pass-through increases with competition, going from 50% in monopoly to around 80% in more competitive markets, but remains incomplete. We also discover a rapid rate of adjustment for VAT changes, as well as a positive relationship between competition and the rate of price adjustment. Finally, we document higher pass-through for products with more inelastic demand.

EFFECTS OF DISAGGREGATED TAX REVENUES ON ECONOMIC GROWTH IN NIGERIA (1995-2023): ARDL BOUND TEST APPROACH

<p>Tax revenue has been a great tool of fiscal policy harnessed toward the economic development of a nation. Its different components have collective effects on the economic growth of a nation. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. This study examined the effects of disaggregated tax revenue on Nigeria's economic growth from 1995 to 2023. The data was sourced from the Central Bank of Nigeria and the Federal Inland Revenue Service databases. Employing multiple regression analysis within an Autoregressive Distributed Lag (ARDL) model, the study assessed the impact of Value Added Tax (VAT), Companies Income Tax (CIT), Petroleum Profit Tax (PPT) and Personal Income Tax (PIT) on economic growth. The diagnostic tests confirmed the model's validity, with unit root tests showing that all variables, except PIT, achieved stationarity after differencing. The findings revealed that each tax revenue component positively influences economic growth. Based on these results, the study recommends enhancing the legal and regulatory frameworks for businesses, including regular evaluations and updates of tax laws and stronger enforcement mechanisms. It also underscores the need to strengthen anti-corruption efforts, promote property rights, uphold the rule of law, and prioritise good governance to foster public confidence and ensure the effective use of tax revenues for economic development.</p><p><strong>JEL: </strong>C32, H20, H24, H25</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0785/a.php" alt="Hit counter" /></p>