Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru
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Summary:
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.
Series:
Working Paper No. 2019/231
Subject:
Credit Financial institutions Money Revenue administration Stocks Tax administration core functions Tax return filing compliance Taxes Value-added tax
English
Publication Date:
November 1, 2019
ISBN/ISSN:
9781513513713/1018-5941
Stock No:
WPIEA2019231
Pages:
36
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