Effects of withholding VAT in Uganda

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Volume Title

School of Business | Master's thesis

Date

2024

Major/Subject

Mcode

Degree programme

Economics

Language

en

Pages

52 + 3

Series

Abstract

Government revenue mobilisation is an important aspect of continued development in developing countries. Taxation and later value-added tax (VAT) have been implemented widely across the world. This thesis examines the history and factors which affect domestic revenue mobilisation in developing countries and more specifically value-added tax (VAT) in the context of Sub-Saharan Africa. I study the effects of a VAT withholding regime implemented in Uganda by using administrative data from Uganda Revenue Authority. By using modern two-way fixed effects models I estimate the dynamic effects and find that firms increase their reported outputs by approximately 17.8 per cent and that the estimated value-added increases by around 35 per cent. I find no effect on reported inputs and I find suggestive evidence that the positive effect found in outputs and value-added might not be persistent across time.

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Thesis advisor

Stryjan, Miri

Keywords

taxation, compliance, third-party reporting, Uganda, withholding VAT, Africa

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