Journal of Tax Reform
Prospects of VAT Administration Improvement in Digitalized World: Analytical Review
O.N. Harkushenko
Institute of Industrial Economics of NAS of Ukraine, Kyiv, Ukraine
Abstract
In conditions of integral digitalization, governments may face a shortfall in VAT revenues due to tax avoidance and frauds. Here arise two opposite hypotheses: 1) digital technologies can solve problems with VAT; 2) digital technologies are not capable to do so. The purpose of the study is to conduct an analytical review of the main problems and ways to improve the administration of VAT in the context of the digitalization of the economy. To achieve this, literature on digital technologies in VAT administration was analyzed. The literature sample consists of 25 sources on e-invoicing and 27 sources on blockchain in VAT administration. The main criteria for literature selection are: accessibility and significance of source; time horizon (last 10–15 years); keywords (“e-invoicing”, “blockchain”, “VAT”, “taxation”, “tax administration”); interdisciplinary approach (literature set represent standpoints of experts from different fields). It was established, that there is no consensus about e-invoicing and blockchain in VAT administration. These technologies have both shortcomings and advantages. The main result of the review is this: digital technologies are not a panacea for solving all problems with VAT administration. That is, both hypothesis of this paper is not proved, but not refuted. Digital technologies can simplify and reduce costs on VAT administration, provided there is a developed ICT infrastructure and consistent regulatory framework, a high tax culture, a low level of “shadow” economy. Interaction between countries in terms of the tax information exchange is also crucial. If these conditions are met, digital technologies in taxation can be effectively employed in the next 5–10 years in the most advanced countries; less developed countries will need much more time for this.
Keywords
digitalization, VAT, tax administration, legal regulation, information and communication technologies, international trade, tax fraud
JEL classification
H25, H26, K34, F51, O33References
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About Authors
Oksana N. Harkushenko – Ph.D., Senior Scientist, Leading Research Scientist of the Department of Financial and Economic Problems of the Production Potential Use, Institute of Industrial Economics of the National Academy of Science of Ukraine (Zhelyabova Str., 2, Kyiv, 03057, Ukraine), ORCID: https://orcid.org/0000-0002-9153-3763, E-mail: garkushenko.o.n@gmail.com
For citation
Harkushenko O.N. Prospects of VAT Administration Improvement in Digitalized World: Analytical Review. Journal of Tax Reform. 2022;8(1):6–24. doi.org/10.15826/jtr.2022.8.1.105
Article info
Received September 9, 2021; Revised January 3, 2022; Accepted February 10, 2022
DOI: https://doi.org/10.15826/jtr.2022.8.1.105
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