"Value-added tax (VAT) now dominates tax systems around the world. But should every country have a VAT? Is the current VAT always as good as it could be in economic, equity, and administrative terms? In developing and transitional countries the answers to such questions are critical to stability, growth, and development. VAT is a critical fiscal tool in most countries. But VAT can sometimes be better designed and almost always better administered. The key questions that must be answered in designing and implementing VAT are essentially the same in all countries. But different tax designs may best suit different countries facing different circumstances. This book reviews experiences with VATs around the world and assesses how the choice of particular design features may affect outcomes in particular contexts."--Jacket Cover......Page 1 Half-title......Page 3 Title......Page 5 Copyright......Page 6 Contents......Page 7 Tables......Page 9 Preface......Page 11 1 Why This Book?......Page 13 The Key Questions......Page 14 What Lies Ahead......Page 17 WHAT IS A VAT?......Page 22 VAT in the European Union......Page 23 A VAT Is a VAT Is a VAT?......Page 26 HOW VAT HASSPREAD......Page 28 WHY VAT HASSPREAD......Page 31 TWOWORLDS OR ONE?......Page 34 3 Is VAT Always the Answer?......Page 40 IF YOU HAVE A VAT, KEEP IT......Page 41 THE ECONOMICS OF TAX CHOICE......Page 44 Business Inputs......Page 45 Taxing Services......Page 49 Other Economic Aspects......Page 51 ADMINISTRATIVE ASPECTS OF TAX CHOICE......Page 53 BORDER ISSUES......Page 55 VAT AND TRADE......Page 60 VAT as Competitive Advantage......Page 61 VAT as Neutral or Even Trade Reducing......Page 63 Empirical Studies and Considerations......Page 65 VAT AND REVENUE......Page 67 A Case Study: Ukraine......Page 70 VAT Productivity and Efficiency......Page 74 VAT and Revenue Reconsidered......Page 79 5 Equity and the Informal Sector......Page 82 WHO REALLY PAYS VAT?......Page 83 BEYOND PARTIAL INCIDENCE STUDIES......Page 85 VAT AND THE FORMAL ECONOMY......Page 89 6 What Should Be Taxed?......Page 93 TAXING REAL PROPERTY......Page 94 PUBLIC SECTOR, NONPROFIT, AND CHARITABLE ACTIVITIES......Page 98 The Way We Are......Page 99 The Way We Might Be......Page 101 Current Practice......Page 109 Alternative Approaches......Page 112 What Should Developing Countries Do?......Page 116 RATES......Page 120 Minimum Rate......Page 123 Maximum Rate......Page 124 The Range of Rates......Page 126 THRESHOLDS......Page 127 EXEMPTIONS......Page 133 Not Worth Taxing......Page 135 Only Fair to Exempt It......Page 138 Exemptions as an Incentive Mechanism......Page 139 Limiting the Damage......Page 142 ZERO-RATING......Page 144 VAT AND EXCISES......Page 147 VAT Is a Partial Solution......Page 150 Lessons from History......Page 153 SUBNATIONAL VATS......Page 156 Current Situation in Federal Countries......Page 159 Approaches to Regional VATs......Page 164 Developing Federal Countries......Page 169 LAUNCHING VAT......Page 173 MAKING VAT WORK......Page 177 Registration......Page 178 Filing......Page 179 Payment......Page 180 Audit......Page 181 Enforcement......Page 184 THE REFUND PROBLEM AND VAT FRAUD......Page 188 STRENGTHENING THE UNDERPINNINGS OF VAT ADMINISTRATION......Page 192 Simplified Regimes......Page 198 Chasing Shadows......Page 201 11 The Political Economy of VAT......Page 205 THE CASE OF MEXICO......Page 208 BALANCING EQUITY, EFFICIENCY, AND SUSTAINABILITY......Page 211 LESSONS FROM HISTORY?......Page 214 WHAT’S IN A NAME?......Page 222 12 Where Do We Go from Here?......Page 225 THE ASIAN EXAMPLE......Page 226 VAT, YES, BUT WHAT VAT?......Page 229 Annex......Page 235 References......Page 245 Index......Page 271
VAT is the most important tax in most developing and transitional countries. This book draws on a wide range of experience and research to discuss a wide range of conceptual and practical issues related to VAT in a way that is relevant both to students and to tax practitioners and officials around the world. It updates, extends, and amends the only similar book-length treatment, The Modern VAT, an authored work published by the International Monetary Fund in 2001.
Why this book? The rise of VAT Is VAT always the answer? Trade and revenue Equity and the informal sector What should be taxed? Key issues in VAT design New issues in VAT design Administering VAT Dealing with difficulties The political economy of VAT Where do we go from here?. Clearly written in non-technical language with many real-world illustrations, this text presents a comprehensive treatment of the major aspects of VAT, believed to be the most important tax in most devoping and transnational contexts
