This paper assesses key issues with the effectiveness, efficiency, and equity of the value-added-tax (VAT) in Indonesia using privileged access to a nine-year long panel dataset of VAT micro-level administrative data for 2011-2019. We derive eleven key findings on the real-life workings of the VAT in Indonesia, providing insights on key policy and administration issues, including on the VAT threshold, VAT preferential regimes, VAT credits/refunds, and VAT filing. Insights from this analysis served as an input into VAT reforms proposals put forward by the government of Indonesia as part of its fiscal consolidation efforts following the Covid-19 pandemic, which were legislated in the Tax Harmonization Law 7 of 2021.

The Value-Added Tax (VAT) system is globally adopted due to its perceived self-enforcing nature along the production chain. However, evidence on the chain effect on enforcement is limited. We investigate a presumptive tax reform in China's agricultural product processing industry and evaluate the enforcement effect throughout the production chain. Employing administrative tax return data from 2009 to 2015 and a staggered difference-in-differences estimation strategy, we show that the reform increased VAT revenue by 28.5% and decreased taxable output in the treated group. This upstream crackdown on VAT evasion significantly impacted enforcement along the VAT chain: downstream food wholesale and retail remitted 12.7% more VAT; furthermore, exporting refund claims, a vulnerable aspect of VAT collection, decreased by 28.3%.

Using a quasi-experimental setting, we document that corporations decrease declared profits and corporate income taxes in response to an increase in the VAT rate. In an attempt to raise tax revenue during the Greek economic crisis, a 16% VAT rate, which existed for historicopolitical reasons in Greek islands, was harmonised to the national 24% rate. We combine tax filings with Orbis and ICAP data that enable us to geolocate corporations and to construct comparable groups based on locations in or out of the preferential rate. Counteracting the reform’s intended effect, declared profits decreased by 28% and corporate income taxes by 34% on a permanent basis. Macroeconomic factors and a fall in reported revenue cannot fully explain this decrease. Pervasive tax evasion in the Greek islands, where corporations might have an opportunity to adjust profits, offers a plausible explanation of the magnitude of responses.

VAT efficiency is shaped by multiple factors. Especially provisions that are diverging from the harmonized European Union model may influence collection performance. The latter include tax expenditures which are considered to be an alternative to direct spending and therefore should be incorporated in the process of making budgetary decisions. This paper attempts to examine tax expenditures in France, Germany and Poland. It contains a comparative analysis of their selected features. It is aimed at addressing the following questions: what are the differences between the countries when it comes to the classification of tax preferential treatments? what are the main VAT expenditures and revenue loss incurred by the largest of them? While enquiring into the concept of VAT expenditures it gives consideration to the degree of diversity in their assessment, structure, scale and value. The paper illustrates a need for increased transparency of tax expenditures evaluation and unification of adopted measures.