VAT efficiency in the countries worldwide

Olena Sokolovska and Dmytro Sokolovskyi ()

MPRA Paper from University Library of Munich, Germany

Abstract: The article aims to estimate the efficiency of value-added tax (VAT) collection in the countries worldwide. In a large part of developing and transition countries VAT performs primarily fiscal function, being the main source of budget revenue (for example in 2014 in Ukraine the revenue obtained from VAT was 51% of total tax revenue, in Moldova it achieved 58,2%). At the same time the shadow economy particularly in form of corruption and tax evasion that exists in these countries leads to a considerable tax gap which in turns reduces VAT efficiency. So, the present study intends to define the VAT efficiency ratio in countries of the world. Preliminary theoretical and methodological analysis allowed us to use for calculations a modification of widespread formula, considering in a certain way a tax evasion process. We investigated the dependence between VAT efficiency ratio and size of shadow sector and level of corruption in countries. This research will allow further investigation of the strategies for establishing of optimal VAT rates depending on efficiency of its levying and size of taxpayers which in turns will contribute to raising efficiency of VAT administration, to the reduction of shadow sector and to the economic growth.

Keywords: VAT; efficiency; shadow sector; corruption (search for similar items in EconPapers)
JEL-codes: C10 D73 E26 H21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-iue, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66422

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