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Technology and tax compliance spillovers: Evidence from a VAT e-invoicing reform in Peru

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  • Bellon, Matthieu
  • Dabla-Norris, Era
  • Khalid, Salma

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 have been mandated to adopt e-invoicing, implying positive technology adoption spillovers. Spillovers are stronger from downstream partners and from export-oriented firms, consistent with incentives in the VAT system. Trading partners of firms who have been mandated to adopt e-invoicing report lower taxable purchases. Transaction-level data suggests that this decline comes from the termination of firm-supplier relationships. Lower purchases result in lower VAT credits, and higher VAT payments following the reform, suggesting positive tax compliance spillovers.

Suggested Citation

  • Bellon, Matthieu & Dabla-Norris, Era & Khalid, Salma, 2023. "Technology and tax compliance spillovers: Evidence from a VAT e-invoicing reform in Peru," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 756-777.
    • Handle: RePEc:eee:jeborg:v:212:y:2023:i:c:p:756-777
    DOI: 10.1016/j.jebo.2023.06.004
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    More about this item

    Keywords

    VAT; Tax compliance; Technology spillovers; Firm transaction data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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