Computerizing Vat Invoices in China

91 Pages Posted: 20 Mar 2018 Last revised: 17 Sep 2021

See all articles by Haichao Fan

Haichao Fan

Fudan University - School of Economics

Yu Liu

Fudan University - School of Economics

Nancy Qian

Yale University - Department of Economics

Jaya Wen

Yale University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2018

Abstract

This paper documents that an increase in the enforcement of value-added tax (VAT) caused by the adoption of a new technology significantly increased VAT payments by large manufacturing firms in China. The reform contributed to 27.1% of VAT revenues and 12.9% of total government revenues in the five subsequent years. The main mechanism is likely to be a reduction in VAT deductions. The dynamic effects of the reform suggest that the rise in tax revenues is non-monotonic over time, with large short-run gains and smaller, though still positive, long-run gains. The reform also reduced firm revenues and inputs, and increased productivity.

Suggested Citation

Fan, Haichao and Liu, Yu and Qian, Nancy and Wen, Jaya, Computerizing Vat Invoices in China (March 2018). Available at SSRN: https://ssrn.com/abstract=3143339

Haichao Fan (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Yu Liu

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China
02165642263 (Phone)

Nancy Qian

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Jaya Wen

Yale University ( email )

New Haven, CT 06520
United States

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