The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

Nancy Qian, Yu Liu, Jaya Wen and Haichao Fan

No 12786, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses a balanced panel of large manufacturing firms to study the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization explains 10.8% of cumulative VAT revenues and increases the effective average tax rate by approximately 9-12% 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.

Keywords: Taxation; State capacity; Technology; Economic development; Firm growth (search for similar items in EconPapers)
JEL-codes: H25 H26 O12 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-acc, nep-eff, nep-pbe, nep-pub and nep-tra
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Citations: View citations in EconPapers (18)

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