Mitigating VAT Compliance Costs – A Developing Country Perspective

34 Pages Posted: 27 Jul 2017

See all articles by Sharon Smulders

Sharon Smulders

University of South Africa

Chris Evans

University of New South Wales

Date Written: April 1, 2017

Abstract

The large‑scale presence and the regressive nature of tax compliance costs, especially those in respect of the value‑added tax (VAT), are well documented features of the tax systems of developed countries. Although there is less evidence available in the case of developing countries, empirical studies strongly suggest that enterprises in these countries face similar problems. In this article, legal design and administrative features and other strategies adopted by governments and their revenue authorities in developed and developing countries to mitigate VAT compliance costs are considered and contrasted. The proposition that governments and revenue authorities in developing countries have learnt from developed countries and deployed more sophisticated technical and automated solutions will thus be evaluated. The article also highlights the benefits and importance of minimising the division between the legal and administrative design approaches to mitigating high VAT compliance costs. It concludes by making suggestions on further interventions that could be considered by developing countries to mitigate VAT compliance costs, perhaps improve compliance and therefore boost much needed VAT revenues.

Suggested Citation

Smulders, Sharon and Evans, Christopher Charles, Mitigating VAT Compliance Costs – A Developing Country Perspective (April 1, 2017). Australian Tax Forum, Vol. 32(2), 2017, Available at SSRN: https://ssrn.com/abstract=3009003

Sharon Smulders (Contact Author)

University of South Africa ( email )

P.O. Box 392
UNISA
Pretoria, Gauteng 0003
South Africa

Christopher Charles Evans

University of New South Wales ( email )

School of Taxation and Business Law
Australian School of Business, UNSW
Sydney, NSW 2052
Australia

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