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

Author/Editor: Shiells, Clinton R.
Authorized for Distribution: December 1, 2002
Electronic Access: Free Full Text (PDF file size is 496KB)
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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.
 
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Series: Working Paper No. 02/235
Subject(s): Competition | Value added tax | Russian Federation | Ukraine | Oil | Energy | Trade | Tax revenues
Author's keyword(s): Russia | Ukraine | Energy Trade | VAT | Imperfect Competition
 
English  
    Published:   December 1, 2002        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2352002   Pages:   18
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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