Estimating the Base of the Value-Added Tax (VAT) in Developing Countries: The Problem of Exemptions
IMF Working Papers, February 1, 1991
Source details
- Canonical URL
- Estimating the Base of the Value-Added Tax (VAT) in Developing Countries: The Problem of Exemptions
Other formats
Bibliographic details
- Authors: George A Mackenzie
- Published: February 1, 1991
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451921465.001
Rationale for exemptions
- Developing countries with VATs typically exempt a large number of goods and services.
- The paper offers a brief discussion of the rationale for exemptions (no further details provided on the page).
Formula and adjustments for the VAT base with exemptions
- The paper presents a formula for the base of a VAT with exemptions.
- Two basic adjustments to the base without exemptions are required:
- Subtraction of the value of sales to consumers of exempt industries.
- Addition of intermediate sales of taxable inputs to exempt industries.
Elasticity and technological change
- The paper concludes with a derivation of the elasticity of a VAT with exemptions with respect to aggregate consumption.
- The paper includes a discussion of the implications of technological change for the VAT base.
Key findings and focus areas (as described on the page)
- Emphasis on how exemptions alter the measurement of the VAT base.
- Identification of the two offsetting adjustments required when exemptions are present.
- Analytical derivation of elasticity linking VAT revenues to aggregate consumption under exemptions.
- Consideration of how technological change may affect the VAT base.
Subjects and keywords (as listed)
- Subjects: Consumption, Consumption taxes, Effective tax rate, National accounts, Tax policy, Taxes, Value-added tax, VAT exemptions
- Keywords: capital goods, Consumption, Consumption taxes, consumption-type VAT, Effective tax rate, intermediate sale, n products, tax liability, taxed goods, Value-added tax, VAT base, VAT exemptions, WP
Disclaimer (as presented on the page)
- 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.
George A Mackenzie, Estimating the Base of the Value-Added Tax (VAT) in Developing Countries: The Problem of Exemptions, IMF Working Paper No. 1991/021 (February 1, 1991).