E-invoicing, Tax Audits and VAT Compliance

Innocente Murasi, John Karangwa, Christos Kotsogiannis and Luca Salvadori

No 1454, Working Papers from Barcelona School of Economics

Abstract: Difficult to find another policy shift that has promised as much for tax compliance in developing countries as digitalization. Yet the evidence on its impact is scant. Using the universe of tax filings in Rwanda over the period 2012-2019, this paper investigates the extent to which digitalization (in the form of e-invoicing) has impacted on VAT compliance and, in particular, the effectiveness of tax audits. The evidence suggests that while e-invoicing adoption per se has increased firms' net VAT payments, this impact is quantitatively limited, as firms seem to re-adjust their expenses so to keep VAT payments low. Interestingly, e-invoicing had a sizable compliance impact on net VAT liabilities re- ported by audited firms, with this impact being attributed to tax audits becoming more efficient, rather than to VAT registered firms becoming more cautious following their participation in the e-invoicing mechanism.

Keywords: Tax evasion; technological change; tax audit evaluation; digitalisation initiatives; tax administration; tax compliance (search for similar items in EconPapers)
JEL-codes: D02 D22 H25 H26 H32 O17 O33 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-acc, nep-iue, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://bw.bse.eu/wp-content/uploads/2024/07/1454-file.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1454

Access Statistics for this paper

More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().