Computerizing VAT Invoices in China

Haichao Fan, Yu Liu, Nancy Qian and Jaya Wen

No 24414, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper documents that an increase in the enforcement of value-added tax (VAT) caused by the adoption of a new technology significantly increased VAT payments by large manufacturing firms in China. The reform contributed to 27.1% of VAT revenues and 12.9% of total government revenues in the five subsequent years. The main mechanism is likely to be a reduction in VAT deductions. The dynamic effects of the reform suggest that the rise in tax revenues is non-monotonic over time, with large short-run gains and smaller, though still positive, long-run gains. The reform also reduced firm revenues and inputs, and increased productivity.

JEL-codes: H26 H32 O10 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-acc, nep-cna, nep-pbe and nep-tra
Note: DEV PE
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Citations: View citations in EconPapers (7)

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