VAT Design and Energy Trade: The Case of Russia and Ukraine

Clinton R. Shiells
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Clinton R. Shiells: International Monetary Fund

IMF Staff Papers, 2005, vol. 52, issue 1, 103-119

Abstract: Given the substantial rents involved in oil and gas trade and the incentives for noncooperative behavior Russia and Ukraine have chosen to deviate from standard tax considerations, which suggest the use of a destination-based value-added tax (VAT) regime. Oil and gas trade is a major source of Russian tax revenue, which is collected partly through an origin-based VAT on energy trade within the Commonwealth of Independent States. This paper shows that, if nondistorting taxes were unavailable, Ukraine would benefit by taxing away the pure profits of the domestic seller of natural gas imports from Russia. The paper also assesses the circumstances under which Ukraine would benefit from simultaneously providing a credit for Russian VAT payments by importers.

JEL-codes: F12 H21 Q43 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:52:y:2005:i:1:p:103-119

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