IMF Working Papers

VIVAT, CVAT and All That: New Forms of Value-Added Tax for Federal Systems

By Michael Keen

April 1, 2000

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Michael Keen. VIVAT, CVAT and All That: New Forms of Value-Added Tax for Federal Systems, (USA: International Monetary Fund, 2000) 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

Conventional wisdom has it that the value-added tax is not a suitable instrument for lower-level jurisdictions (‘provinces’) in a federal system. The problems that arise when it is so used have become a serious constraint on the development of the VAT—and closer economic integration—in Brazil, the EU, India and elsewhere. This paper describes and compares two recent proposals for forms of VAT intended to alleviate these difficulties: the VIVAT and the CVAT. Both enable the VAT chain to be preserved on inter-provincial trade without compromising the destination principle (allowing provinces to tax consumption at different rates) or introducing new scope for game-playing by the provinces. The key difference between them is that the CVAT requires sellers to discriminate between buyers located in different provinces of the federation, whereas VIVAT requires them to discriminate between registered and non-registered buyers. Where the balance of advantage between the two lies is not entirely obvious.

Subject: Administration in revenue administration, Destination-based taxation, Revenue administration, Sales tax, Tax administration core functions, Tax incentives, Taxes, Value-added tax

Keywords: Administration, Administration in revenue administration, Compensating VAT, CVAT, CVAT rate, CVAT tax, Destination-based taxation, Fiscal Federalism, Input tax, Invoice-credit VAT, Origin taxation, Output tax, Sales tax, Tax, Tax administration, Tax administration core functions, Value added tax, Value-added tax, VAT, VAT chain, VAT logic, VAT number, VAT status, VAT system, WP

Publication Details

  • Pages:

    19

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2000/083

  • Stock No:

    WPIEA0832000

  • ISBN:

    9781451850536

  • ISSN:

    1018-5941

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