The Performance of VAT in DGD-partner countries

Mattéo Godin (), Romain Houssa and Kelbesa Megersa
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Mattéo Godin: CRED, University of Namur

No 116, BeFinD Working Papers from University of Namur, Department of Economics

Abstract: This study presents a case study on the value added-tax (VAT) with the objective to design appropriate policies aiming to improve domestic-resource mobilization in developing countries. Data from 18 DGD-partner countries (past and present) over the 1990-2012 period show that, although the performance of VAT has inproved in recent years, many of these countries can close their resource gap by implementing reforms that improve the efficiency of their VAT system. We present an in-depth analysis on Bolivia to illustrate how such reforms could be designed. Bolivia is also an interesting case since the country was one of the first developing countries to adopt VAT in a context characterized by socio-economic and political challenges. We argue that the credibility of the Bolivian government as well as the institutional design of its tax system were very important for the success of their tax reforms. Moreover, we show that the improvement of both the policy and compliance gaps have contributed to the reduction of Bolivia’s VAT gap in recent years, but improvements in compliance gap are the main deriver.

Keywords: Value Added Tax; Tax gaps; Tax Efficiency; Tax Compliance; Tax Law; Bolivia (search for similar items in EconPapers)
JEL-codes: H21 H26 K34 N16 N26 O54 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2017-02
New Economics Papers: this item is included in nep-acc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:nam:befdwp:0116

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