Discussion paper

DP12786 The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

This paper uses a balanced panel of large manufacturing firms to study the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization explains 10.8% of cumulative VAT revenues and increases the effective average tax rate by approximately 9-12% in the seven subsequent years. The evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.

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Citation

Qian, N, Y Liu, J Wen and H Fan (eds) (2018), “DP12786 The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms”, CEPR Press Discussion Paper No. 12786. https://cepr.org/publications/dp12786