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VAT notches, voluntary registration, and bunching : theory and UK evidence
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Liu, Li, Lockwood, Ben, Almunia, Miguel and Tam, Eddy H. F. (2021) VAT notches, voluntary registration, and bunching : theory and UK evidence. Review of Economics and Statistics, 103 (1). pp. 151-164. doi:10.1162/rest_a_00884 ISSN 0034-6535.
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WRAP-VAT-notches-voluntary-registration-bunching-theory-UK-evidence-Lockwood-2019.pdf - Accepted Version - Requires a PDF viewer. Download (1681Kb) | Preview |
Official URL: https://doi.org/10.1162/rest_a_00884
Abstract
Using adminstrative tax records for UK businesses, we document both bunching in annual turnover below the VAT registration threshold and persistent voluntary registration by almost half of the firms below the threshold. We develop a conceptual framework that can simultaneously explain these two apparently conflicting facts. The framework also predicts that higher intermediate input shares, lower product-market competition and a lower share of business to consumer (B2C) sales lead to voluntary registration. The predictions are exactly the opposite for bunching. We test the theory using linked VAT and corporation tax records from 2004-2014, finding empirical support for these predictions.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HJ Public Finance H Social Sciences > HV Social pathology. Social and public welfare |
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| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Value-added tax, Value-added tax -- Great Britain, Tax evasion, Tax evasion -- Great Britain, Income tax -- Great Britain -- Rates and tables | ||||||||
| Journal or Publication Title: | Review of Economics and Statistics | ||||||||
| Publisher: | MIT Press | ||||||||
| ISSN: | 0034-6535 | ||||||||
| Official Date: | March 2021 | ||||||||
| Dates: |
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| Volume: | 103 | ||||||||
| Number: | 1 | ||||||||
| Number of Pages: | 45 | ||||||||
| Page Range: | pp. 151-164 | ||||||||
| DOI: | 10.1162/rest_a_00884 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Reuse Statement (publisher, data, author rights): | This is the author’s final version. The article has been accepted for publication in Review of Economics and Statistics © 2019 The MIT Press | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Copyright Holders: | © 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology | ||||||||
| Date of first compliant deposit: | 5 September 2019 | ||||||||
| Date of first compliant Open Access: | 11 September 2019 | ||||||||
| RIOXX Funder/Project Grant: |
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