Reforming Value Added Tax System in Developing World: the Case of Nepal

Sanjaya Acharya

Abstract


Value Added Tax (VAT) has become an integral part of domestic tax reforms in many developing countries. Taking the case of Nepal, VAT associates a number of refunds to different private sector activities for promoting investment in higher growth and export potential sectors. Total refund, more specifically, export refund has a significant positive impact on the level of GDP. Furthermore, non-agricultural GDP has strong positive influence to VAT C-efficiency ratio. Likewise, higher the VAT gap, lower is the C-efficiency ratio. If C-efficiency is improved coupled with higher compliance, the capability of the government is strengthened in domestic revenue generation.


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DOI: https://doi.org/10.11114/bms.v2i2.1616

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Business and Management Studies     ISSN 2374-5916 (Print)     ISSN 2374-5924 (Online)

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