Imperfect Competition and the Design of VAT Regimes: The Case of Energy Trade Between Russia and Ukraine

December 1, 2002

Preview Citation

Format: Chicago

Clinton R. Shiells Imperfect Competition and the Design of VAT Regimes: The Case of Energy Trade Between Russia and Ukraine, (USA: International Monetary Fund, 2002) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Under imperfect competition, Russia and Ukraine may choose to deviate from optimal tax considerations which suggest use of a destination-based VAT regime. Oil and gas trade is a major source of Russian tax revenue, which is collected partly through an origin-based VAT on intra-CIS energy trade. The paper shows that Ukraine may try to capture part of the tax revenue if it has monopsony power. It is far from clear whether Ukraine would succeed in shifting the rents through taxation, since this depends on the form of imperfect competition and the curvature of Ukraine's import demand function.

Subject: Commodities, Export prices, International trade, Oil, Oil exports, Prices, Tariffs, Taxes, Value-added tax

Keywords: Baltics, CIS country, Demand function, Double taxation, Energy Trade, Export prices, Gas export, Imperfect Competition, Oil, Oil exports, Russia, Tariffs, Tax rate, Ukraine, Value-added tax, VAT, VAT exempt, VAT regime, WP

Publication Details

Pages:

18
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/235
Stock No:

WPIEA2352002
ISBN:

9781451875669
ISSN:

1018-5941

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