H87, H25, F10, F13, F14
Working Paper Number
While a VAT should in principle be neutral with respect to international trade, it may in practice function as a tax on exporters' input purchases if firms receive incomplete VAT refunds. Using data for over 100 countries that span the majority of historical VAT adoption episodes, this paper finds that – consistent with this hypothesis – the VAT reduces the exports of an industry with a 10% point higher intermediate goods share of output by over 8% relative to an industry with a lower share. This effect is driven by developing countries and is absent for high-income countries.
Sharma, Rishi, "Does the VAT tax exports?" (2017). Economics Faculty Working Papers. 55.