Value-added Tax Neutrality, Corporate Investment and Valuation: Evidence from the Reform of Uncredited VAT Refund

Abstract

 In recent years, the value-added tax (VAT) has been widely adopted as a tax vehicle in developing countries. In the context of national tax reforms, VAT was often adopted to replace the more complicated tax systems for selling goods and services. Given the growing interest in VAT, it is necessary to evaluate issues and principles that are relevant to developing countries. The main objective is to evaluate the experience of developed and developing countries adopting this tax and to collect useful lessons from these experiences to guide tax reform in developing countries. The research provides a cross section of the questions and describes the state of knowledge on VAT. Thus, researchers and policy-makers can assess the direct relevance of VAT to developing countries with different levels of administrative capacity. The collected funds are expected to contribute to improving taxation and promoting effective resource allocation in developing countries. The work provides broad guidelines for improving the design and administration of VAT refund mechanisms across various areas of VAT management, reflecting international good practices. Firstly, it analyzes the results of a brief survey of tax refund practices in selected countries at various income levels, and reflects its advice. Secondly, it provides recommendations for countries to improve VAT refund management. Thirdly, it offers suggestions for countries that should develop strategies to tackle VAT refund fraud and improve tax revenue forecasts and strengthen treasury cash management.