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Information, Asymmetric Incentives, or Withholding? Understanding the Self-Enforcement of Value-Added Tax

Mazhar Waseem and Mazhar Waseem
Authors registered in the RePEc Author Service: Mazhar Waseem

No 7736, CESifo Working Paper Series from CESifo

Abstract: During the period 1996-2000, the coverage of VAT in Pakistan rose by twenty times in terms of the number of firms in the tax net and by ten times in terms of the volume of transactions subject to it. This paper leverages this staggered introduction of VAT in the country to estimate its enforcement spillovers. Focusing on firms already in the tax net, I explore if their tax compliance improves as VAT gets extended to their trading partners. Using differential responses to upward and downward extension of the tax, I characterize the mechanisms underlying the self-enforcement response.

Keywords: VAT; tax evasion; informality (search for similar items in EconPapers)
JEL-codes: H25 H26 O17 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
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