The Double Dividend of a Joint Tariff and VAT Reform
This paper provides empirical evidence on a novel complementarity between VAT and trade taxes. Downstream domestic firms require VAT receipts from importers to claim VAT on purchases, increasing incentives for honest reporting of imports. Trade gap, the difference between mirror and domestic trade reports in Iran at 6-digit HS disaggregation, is used to measure this complementarity. Iran introduced VAT in 2008 and, since then, has increased its rate from 3 to 9 percent. Difference-in-differences estimates show that a 1 percentage point increase in the VAT rate reduces the trade gap by about 2 percent. Consistent with the compliance mechanisms for VAT, a smaller effect for consumer products that have a shorter value chain is observed. Findings suggest that replacing tariffs with VAT results in a double dividend. Tax revenue might increase due to better tariff compliance and a broader VAT base.
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| Format: | Journal Article biblioteca |
| Language: | English en_US |
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Published by Oxford University Press on behalf of the World Bank
2023-02-06
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| Subjects: | VALUE ADDED TAX, TRADE LIBERALIZATION, TARIFFS, CHAINS EFFECT, TAX COMPLIANCE, |
| Online Access: | http://documents.worldbank.org/curated/en/099235409042323365/IDU040f223a80b0ae040b40b64501fd98747778a https://hdl.handle.net/10986/41317 |
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dig-okr-10986413172024-05-01T18:32:05Z The Double Dividend of a Joint Tariff and VAT Reform Evidence from Iran Yousefi, Kowsar Vesal, Mohammad VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE This paper provides empirical evidence on a novel complementarity between VAT and trade taxes. Downstream domestic firms require VAT receipts from importers to claim VAT on purchases, increasing incentives for honest reporting of imports. Trade gap, the difference between mirror and domestic trade reports in Iran at 6-digit HS disaggregation, is used to measure this complementarity. Iran introduced VAT in 2008 and, since then, has increased its rate from 3 to 9 percent. Difference-in-differences estimates show that a 1 percentage point increase in the VAT rate reduces the trade gap by about 2 percent. Consistent with the compliance mechanisms for VAT, a smaller effect for consumer products that have a shorter value chain is observed. Findings suggest that replacing tariffs with VAT results in a double dividend. Tax revenue might increase due to better tariff compliance and a broader VAT base. 2024-03-28T18:43:21Z 2024-03-28T18:43:21Z 2023-02-06 Journal Article http://documents.worldbank.org/curated/en/099235409042323365/IDU040f223a80b0ae040b40b64501fd98747778a The World Bank Economic Review 0258-6770 (print) 1564-698X (online) https://hdl.handle.net/10986/41317 English en_US World Bank Economic Review World Bank Economic Review CC BY-NC-ND 3.0 IGO https://creativecommons.org/licenses/by-nc-nd/3.0/igo/ World Bank application/pdf text/plain Published by Oxford University Press on behalf of the World Bank |
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Banco Mundial |
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| country |
Estados Unidos |
| countrycode |
US |
| component |
Bibliográfico |
| access |
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| databasecode |
dig-okr |
| tag |
biblioteca |
| region |
America del Norte |
| libraryname |
Biblioteca del Banco Mundial |
| language |
English en_US |
| topic |
VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE |
| spellingShingle |
VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE Yousefi, Kowsar Vesal, Mohammad The Double Dividend of a Joint Tariff and VAT Reform |
| description |
This paper provides empirical
evidence on a novel complementarity between VAT and trade
taxes. Downstream domestic firms require VAT receipts from
importers to claim VAT on purchases, increasing incentives
for honest reporting of imports. Trade gap, the difference
between mirror and domestic trade reports in Iran at 6-digit
HS disaggregation, is used to measure this complementarity.
Iran introduced VAT in 2008 and, since then, has increased
its rate from 3 to 9 percent. Difference-in-differences
estimates show that a 1 percentage point increase in the VAT
rate reduces the trade gap by about 2 percent. Consistent
with the compliance mechanisms for VAT, a smaller effect for
consumer products that have a shorter value chain is
observed. Findings suggest that replacing tariffs with VAT
results in a double dividend. Tax revenue might increase due
to better tariff compliance and a broader VAT base. |
| format |
Journal Article |
| topic_facet |
VALUE ADDED TAX TRADE LIBERALIZATION TARIFFS CHAINS EFFECT TAX COMPLIANCE |
| author |
Yousefi, Kowsar Vesal, Mohammad |
| author_facet |
Yousefi, Kowsar Vesal, Mohammad |
| author_sort |
Yousefi, Kowsar |
| title |
The Double Dividend of a Joint Tariff and VAT Reform |
| title_short |
The Double Dividend of a Joint Tariff and VAT Reform |
| title_full |
The Double Dividend of a Joint Tariff and VAT Reform |
| title_fullStr |
The Double Dividend of a Joint Tariff and VAT Reform |
| title_full_unstemmed |
The Double Dividend of a Joint Tariff and VAT Reform |
| title_sort |
double dividend of a joint tariff and vat reform |
| publisher |
Published by Oxford University Press on behalf of the World Bank |
| publishDate |
2023-02-06 |
| url |
http://documents.worldbank.org/curated/en/099235409042323365/IDU040f223a80b0ae040b40b64501fd98747778a https://hdl.handle.net/10986/41317 |
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AT yousefikowsar thedoubledividendofajointtariffandvatreform AT vesalmohammad thedoubledividendofajointtariffandvatreform AT yousefikowsar evidencefromiran AT vesalmohammad evidencefromiran AT yousefikowsar doubledividendofajointtariffandvatreform AT vesalmohammad doubledividendofajointtariffandvatreform |
| _version_ |
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