Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru

By Matthieu Bellon, Jillie Chang, Era Dabla-Norris, Salma Khalid, Frederico Lima, Enrique Rojas, Pilar Villena

November 1, 2019

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Format: Chicago

Matthieu Bellon, Jillie Chang, Era Dabla-Norris, Salma Khalid, Frederico Lima, Enrique Rojas, and Pilar Villena. Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru, (USA: International Monetary Fund, 2019) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Credit, Financial institutions, Money, Revenue administration, Stocks, Tax administration core functions, Tax return filing compliance, Taxes, Value-added tax

Keywords: Authority, Caribbean, Construction firm, Credit, Digitalization, Electronic invoicing, Firm, Firm size interaction term, Stocks, Tax administration core functions, Tax compliance, Tax return filing compliance, Value-added tax, VAT, VAT collection, VAT credit, VAT liability, VAT payment, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/231
Stock No:

WPIEA2019231
ISBN:

9781513513713
ISSN:

1018-5941

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