Problems of Administering a Value-Added Tax in Developing Countries

Milka Casanegra de Jantscher

No 1986/015, IMF Working Papers from International Monetary Fund

Abstract: During the 1970s and 1980s, many developing countries enacted value-added taxes (VATs) as a part of their fiscal structures. The productivity of this source of revenue has depended in large part on the facility with which the tax can be administered. Single rate VATs have proved easier to administer than those with multiple rates. Exemptions and zero-rating tend to complicate administration. Because small taxpayers are so numerous in developing countries and administrative resources so limited, the treatment of small taxpayers has required special attention. The difficulty of taxing services has led most developing countries to omit all but a few services from the tax base. Administrative constraints are the main reason why the VAT that prevails in developing countries is usually very different from the broad-based and neutral tax discussed in public finance treatises.

Keywords: WP; VAT taxpayer; collection lag; VAT administration; VAT collection; compliance cost; VAT legislation; VAT rate; VAT register; VAT audit programs; Value-added tax; Tax administration core functions; Administration in revenue administration; Sales tax; Auditing (search for similar items in EconPapers)
Pages: 22
Date: 1986-12-01
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Citations: View citations in EconPapers (3)

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