Digitalization and Tax Compliance Spillovers: Evidence from a VAT e-Invoicing Reform in Peru
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Summary:
Our study uses administrative data on firm-to-firm transactions and quasi- experimental variation in the rollout of electronic invoicing reforms in Peru to study the diffusion of e-invoicing through firm networks and its effect on tax compliance. We find that voluntary e-invoicing adoption is higher amongst firms with partners who are mandated to adopt e-invoicing, implying positive technology adoption spillovers. Spillovers are stronger from downstream partners and from export-oriented firms. Firms are less likely to continue transacting with a partner who has been mandated into e-invoicing, with the effect only partially reversed if both firms adopt e-invoicing, suggesting that network segmentation may occur. Smaller firms who transact with partners mandated into e-invoicing report 11 percent more sales and pay 17 more VAT in the year that their partner is mandated to adopt e-invoicing, suggesting positive spillovers in tax compliance behavior for this subset of firms.
Series:
Working Paper No. 2022/057
Subject:
Financial sector policy and analysis Positive spillovers Revenue administration Spillovers Tax policy Tax return filing compliance Tax spillovers Taxes Value-added tax
Frequency:
regular
English
Publication Date:
March 18, 2022
ISBN/ISSN:
9798400204876/1018-5941
Stock No:
WPIEA2022057
Pages:
40
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