IMF Working Papers Volume 2019 Issue 231: Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru (2019)

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

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Mr. Matthieu Bellon

Mr. Matthieu Bellon
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Jillie Chang

Jillie Changnull

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Ms. Era Dabla-Norris

Ms. Era Dabla-Norris
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Salma Khalid

Salma Khalidnull

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Frederico Lima

Frederico Limanull

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Enrique Rojas

Enrique Rojasnull

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Pilar Villena

Pilar Villenanull

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Series:: IMF Working Papers

Volume/Issue:: Volume 2019: Issue 231

Publication Date:: 01 Nov 2019

DOI:: https://doi.org/10.5089/9781513513713.001

ISBN:: 9781513513713

ISSN:: 1018-5941

Pages:: 36

Keywords:: WP; firm; VAT; authority; electronic invoicing; tax compliance; digitalization; VAT collection; firm size interaction term; VAT liability; VAT credit; construction firm; VAT payment; Value-added tax; Credit; Tax administration core functions; Tax return filing compliance; Stocks; Caribbean

Legal-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.

Series:: IMF Working Papers

Volume/Issue:: Volume 2019: Issue 231

Language:: English

Publication Date:: 01 Nov 2019

DOI:: https://doi.org/10.5089/9781513513713.001

ISBN:: 9781513513713

ISSN:: 1018-5941

Pages:: 36

Keywords:: WP; firm; VAT; authority; electronic invoicing; tax compliance; digitalization; VAT collection; firm size interaction term; VAT liability; VAT credit; construction firm; VAT payment; Value-added tax; Credit; Tax administration core functions; Tax return filing compliance; Stocks; Caribbean

Legal-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.

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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.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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