Enhancing Tax Compliance in the Dominican Republic Through Risk-based VAT Invoice Management

Author/Editor:

Cristian Alonso ; Ledys Feliz ; Patricia Gil ; Miguel Pecho

Publication Date:

September 10, 2021

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:

Invoices document economic transactions and are thus critical to assess tax liabilities. We study a reform in the Dominican Republic that aimed to integrate invoice management into a broader, more comprehensive, risk-based compliance strategy. By rationing authorized invoices based on an extra scrutiny of each taxpayer’s compliance history, the reform led to significant and persistent improvements on filing, payment, and information reporting obligations and a modest increase in reported tax liabilities. Our study shows that deterrence effects over compliance behaviors are strengthened when the tax administration makes explicit and active use of taxpayers’ information, no matter if the invoicing framework is paper-based or electronic.

Series:

Working Paper No. 2021/231

Frequency:

regular

English

Publication Date:

September 10, 2021

ISBN/ISSN:

9781513595924/1018-5941

Stock No:

WPIEA2021231

Pages:

32

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