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

By Cristian Alonso, Ledys Feliz, Patricia Gil, Miguel Pecho

September 10, 2021

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Cristian Alonso, Ledys Feliz, Patricia Gil, and Miguel Pecho. Enhancing Tax Compliance in the Dominican Republic Through Risk-based VAT Invoice Management, (USA: International Monetary Fund, 2021) accessed October 9, 2024

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.

Subject: Economic sectors, Income and capital gains taxes, Revenue administration, Small and medium enterprises, Tax administration core functions, Tax arrears management, Taxes, Value-added tax

Keywords: Authorized invoice, Caribbean, Compliance history, Compliance strategy, Filing obligation, Income and capital gains taxes, Invoice management, Small and medium enterprises, Tax administration core functions, Tax arrears management, Value-added tax

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/231
Stock No:

WPIEA2021231
ISBN:

9781513595924
ISSN:

1018-5941

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