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

Author/Editor:

Matthieu Bellon ; Jillie Chang ; Era Dabla-Norris ; Salma Khalid ; Frederico Lima ; Enrique Rojas ; Pilar Villena

Publication Date:

November 1, 2019

Electronic Access:

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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.

Summary:

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.

Series:

Working Paper No. 19/231

Subject:

English

Publication Date:

November 1, 2019

ISBN/ISSN:

9781513513713/1018-5941

Stock No:

WPIEA2019231

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

36

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