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Effect of Value Added Tax Collection on Gross Domestic Product in Rwanda (2012-2022)

Author

Listed:
  • Christophe Nshimiyimana

    (Institut D’enseignement Supérieur De Ruhengeri)

  • Dr. Jean Paul MPAKANIYE

    (Institut D’enseignement Supérieur De Ruhengeri)

Abstract

This study investigated the impact of VAT collection, encompassing VAT collected on goods, services, and imports, on the GDP of Rwanda 2012-2022 using a multiple regression model. VAT plays a pivotal role in the fiscal policies of countries worldwide, and its efficient collection can significantly influence a nation’s economic performance. In the Rwandan context, where VAT is applied comprehensively, understanding how these diverse components of VAT affect GDP growth is essential for evidence-based policymaking and economic planning. Employing a multiple regression model, this research examines the relationship between VAT collection and GDP while controlling for other relevant factors that might influence economic growth. The study utilizes both time-series and cross-sectional data to capture the intricate dynamics at play. By analyzing the impact of VAT collected on goods, services, and imports separately and collectively, this study provides a nuanced perspective on the contribution of VAT to Rwanda’s economic development.The results of this research have significant implications for Rwanda’s policymakers, offering insights into the effectiveness of VAT as a revenue-generation tool and its role in fostering economic growth.This result indicate : Tax on Importation has a positive and statistically significant effect on GDP (Beta = 0.475, p = 0.010), suggesting that an increase in importation taxes is associated with an increase in GDP. Similarly, Tax on Goods shows a positive and statistically significant relationship with GDP (Beta = 0.309, p = 0.033), implying that higher taxes on goods are linked to higher GDP. This study suggests that taxation policies, particularly taxes on importation and goods, may have a significant influence on a region or country’s Gross Domestic Product. However, further research and consideration of other economic factors are necessary to fully understand the complex dynamics.

Suggested Citation

  • Christophe Nshimiyimana & Dr. Jean Paul MPAKANIYE, 2024. "Effect of Value Added Tax Collection on Gross Domestic Product in Rwanda (2012-2022)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 3340-3351, August.
  • Handle: RePEc:bcp:journl:v:8:y:2024:i:8:p:3340-3351
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    References listed on IDEAS

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