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Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru

Matthieu Bellon, Jillie Chang, Era Dabla-Norris, Salma Khalid, Frederico Lima, Enrique Rojas and Pilar Villena

No 2019/231, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the impact of e-invoicing on firm tax compliance and performance using administrative tax data and quasi-experimental variation in the rollout of VAT electronic invoicing in Peru. We find that e-invoicing increases reported firm sales, purchases and value-added by over 5 percent in the first year after adoption. The impact is concentrated among smaller firms and sectors with higher rates of non-compliance, suggesting that e-invoicing enhances compliance by lowering compliance costs and strengthening deterrence. The reform’s positive effects on tax collection are hindered by shortcomings in the VAT refund mechanism in Peru, suggesting that digital tools such as e-invoicing should be complemented by other reforms to improve revenue mobilization.

Keywords: WP; firm; VAT; authority; electronic invoicing; tax compliance; digitalization; VAT collection; firm size interaction term; VAT liability; VAT credit; construction firm; VAT payment; Value-added tax; Credit; Tax administration core functions; Tax return filing compliance; Stocks; Caribbean (search for similar items in EconPapers)
Pages: 36
Date: 2019-11-01
New Economics Papers: this item is included in nep-acc, nep-iue, nep-pay and nep-pbe
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Citations: View citations in EconPapers (10)

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Handle: RePEc:imf:imfwpa:2019/231