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 Centre for Economic Policy Research

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 (22)

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