Digitalization and Tax Compliance Spillovers: Evidence from a VAT e-Invoicing Reform in Peru

40 Pages Posted: 7 Apr 2022

See all articles by Matthieu Bellon

Matthieu Bellon

International Monetary Fund (IMF)

Jillie Chang

Independent

Era Dabla-Norris

International Monetary Fund (IMF)

Salma Khalid

International Monetary Fund (IMF) - Fiscal Affairs Department

Juan Carlos Paliza

Independent

Pilar Villena

Independent

Date Written: March 1, 2022

Abstract

Our study uses administrative data on firm-to-firm transactions and quasi- experimental variation in the rollout of electronic invoicing reforms in Peru to study the diffusion of e-invoicing through firm networks and its effect on tax compliance. We find that voluntary e-invoicing adoption is higher amongst firms with partners who are mandated to adopt e-invoicing, implying positive technology adoption spillovers. Spillovers are stronger from downstream partners and from export-oriented firms. Firms are less likely to continue transacting with a partner who has been mandated into e-invoicing, with the effect only partially reversed if both firms adopt e-invoicing, suggesting that network segmentation may occur. Smaller firms who transact with partners mandated into e-invoicing report 11 percent more sales and pay 17 more VAT in the year that their partner is mandated to adopt e-invoicing, suggesting positive spillovers in tax compliance behavior for this subset of firms.

Keywords: VAT, tax compliance, technology spillovers, firm transaction data, transaction data, tax compliance Spillovers, downstream partner, technology adoption spillover, technology spillover, export-oriented firm, Value-added tax, Tax return filing compliance, Spillovers, Positive spillovers, Tax spillovers, Caribbean

JEL Classification: D22, H25, H26, L25, O17, L14, H20, D62, O30

Suggested Citation

Bellon, Matthieu and Chang, Jillie and Dabla-Norris, Era and Khalid, Salma and Paliza, Juan Carlos and Villena, Pilar, Digitalization and Tax Compliance Spillovers: Evidence from a VAT e-Invoicing Reform in Peru (March 1, 2022). IMF Working Paper No. 2022/057, Available at SSRN: https://ssrn.com/abstract=4076354

Matthieu Bellon (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jillie Chang

Independent ( email )

Era Dabla-Norris

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Salma Khalid

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Juan Carlos Paliza

Independent ( email )

Pilar Villena

Independent ( email )

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