The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

91 Pages Posted: 13 Mar 2018

See all articles by Haichao Fan

Haichao Fan

Fudan University - School of Economics

Yu Liu

Fudan University - School of Economics

Nancy Qian

Yale University - Department of Economics

Jaya Wen

Yale University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2018

Abstract

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.

Keywords: economic development, Firm Growth, state capacity, taxation, technology

JEL Classification: H25, H26, O12

Suggested Citation

Fan, Haichao and Liu, Yu and Qian, Nancy and Wen, Jaya, The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms (March 2018). CEPR Discussion Paper No. DP12786, Available at SSRN: https://ssrn.com/abstract=3138848

Haichao Fan (Contact Author)

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Yu Liu

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China
02165642263 (Phone)

Nancy Qian

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Jaya Wen

Yale University ( email )

New Haven, CT 06520
United States

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