Effectiveness of the Value Added Tax Exemption Policy on Gross Domestic Product in Selected ASEAN Countries Towards a Conducive Business Environment Model
DOI:
https://doi.org/10.31098/jgrcs.v1i2.686Abstract
Excessive exemption is detrimental to the effectiveness of the whole Value Added Tax system. This research is primarily focused on VAT exemption affecting the business industry as it influences the Gross Domestic Product of the three (3) selected ASEAN countries, namely, the Philippines, Indonesia, and Singapore. The result of the study showed a negative relationship between VAT exemption policy and GDP growth rate among the selected ASEAN economies. Although the VAT collections among the selected ASEAN countries are significantly increasing with the course of time, the results showed that as the number of VAT exemptions increases by one unit, the degree of growth of the GDP is expected to decrease at a rate of 0.900 units. Thus, a conducive business environment may be achieved by decreasing the number of VAT exemptions and, accordingly, increasing the GDP growth rate.
Downloads
References
Aizenman, J., & Jinjarak, Y., Kim, J. and Park D., “Tax Revenue Trends in Asia and Latin America: A Comparative Analysis”, NBER, Working Paper No. 21755, 2015.
Basri, M. and Rahardja, S., “Mild Crisis, Half Hearted Fiscal Stimulus: Indonesia During the GFC”, in Ito, T. and F. Parulian (eds.), “Assessment on the Impact of Stimulus, Fiscal Transparency and Fiscal Risk”, ERIA Research Project Report 2010-01, pp.169-211, ERIA, www.eria.org/publications/ research_projectreports/images/pdf/y2010/no1/ch5Basri_andRahardjaIndonesia.pdf, 2011.
Bureau of Internal Revenue (BIR) Annual Report 2008.
Chetty, V. and Pradhan, B., “Harrod-Domar Formula for Two Sector Growth Models,” Institute of Economic Growth, Boston University, 2015.
Deloitte, “Risk, uncertainty and opportunity in a changing tax landscape”, Deloitte Touche Tohmatsu Ltd., 2014.
Domar, E., “Capital expansion, rate of growth, and employment,” Econometrica, 14(2):pp. ?137–147, 1946.
Ernst and Young, “Indirect taxes in 2015”, EYG no. DL1195, www.ey.com/Publication/vwLUAssets/ey-indirect-tax-developments-in-2015/%24FILE/ey-indirect-tax-developments-in-2015.pdf, 2015.
Harrod, R., “An essay in dynamic theory,” The Economic Journal, 49 (193): pp. 14–33, 1939.
Henegadara, G., “Rostow’s Stages of Economic Growth,” University of Kelaniya, 2016.
IBFD, “International Bureau of Fiscal Documentation (website)”, https://www.ibfd.org/, 2017.
IMF, “Indonesia, selected issues”, IMF Country Report No. 17/48, International Monetary Fund, Washington, DC, https://www.imf.org/~/media/Files/Publications/CR/2017/cr1748.ashx, 2017.
Indonesia Focus, “Achieiving Fiscal Sustainability Key To Fostering Higher Economic Growth”, UOB Global Economics & Markets Research, Quarterly Global Outlook 2Q, 2018.
International Co-operative Alliance, “Paraguay will apply VAT tax on services co-operatives provide to their members”, https://ica.coop/en/media/news/paraguay-will-apply-vat-tax-services-co-operatives- provide-their-members, viewed January 27, 2017.
International Monetary Fund, “Philippines: 2004 Article IV Consultation and Post-Program Monitoring Discussions— Staff Report; Staff Statement; Statement by the Executive Director for the Philippines; and Public Information Notice on the Executive Board Discussion”, IMF Country Report No. 05/105, 2005.
Jack, W., “The efficiency of VAT implementation: a comparative study of Central and Eastern European countries in transition”, 1996.
Jurado, F., “Proposed Reforms on Value Added Tax”, NTRC Tax Research Journal, Vol. XXIX.3, 2017.
Manasan, R., “Assessment of the 2017 Tax Reform for Acceleration and Inclusion,” Philippine Institute for Development Studies, 2017.
Obias, Jr., “Estimates of the Value Added Tax Gap: 2009”, NTRC Tax Research Journal, Vol. XXII.5, 2010.
Parr, J., “On the Regional Dimensons of Rostow’s Theory of Growth,” The Applied Regional Science Conference, Blackwell Publishers Ltd., 2001.
The World Bank, “Paraguay Overview", http://www.worldbank.org/en/country/ Paraguay/overview, and The International Monetary Fund (IMF), "Paraguay: 2016 Article IV Consultation – Press Release and Staff Report", 2017.
Thirlwall, A., “The Nature of Economic Growth: An Alternative Framework for Understanding the Performance of Nations,” E. Elgar, 2002.
UNESCAP, “Economic and Social Survey of Asia and the Pacific 2014”, Regional Connectivity for Shared Prosperity, United Nations, https://www.unescap.org/sites/default/files/Economic%20and %20Social%20Survey%20of%20Asia%20and%20the%20Pacific%202014.pdf, 2014.
United States Department of Agriculture (USDA), “Understanding Cooperatives: Income Tax Treatment of Cooperatives”, Cooperative Information Report 45, Section 8, http://www.uwcc.wisc.edu/pdf/CIR45-8.pdf, viewed January 27, 2017.
World Bank, “East Asia Pacific Economic Update, October 2015: Staying the Course”, Washington, D.C.: World Bank, 2015.
World Bank, “Community Driven Development and Social Capital: Designing a Baseline Survey in the Philippines”, World Bank Report No. 32405-PH, May 2005.
Downloads
Article Metrics
- 187 times
- 171 times
Published
Citation Check
How to Cite
Issue
Section
License
Copyright (c) 2021 Atty. Prackie Jay T. Acaylar
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Content Licensing, Copyright, and Permissions
1. License
Journal of Governance Risk Management Compliance and Sustainability (JGRCS) has CC-BY NC or an equivalent license as the optimal license for the publication, distribution, use, and reuse of scholarly work for non-commercial purpose. The non-commercial use of the article will be governed by the Creative Commons Attribution license as currently displayed on Creative Commons Attribution-NonCommercial 4.0 International License
Creative Commons License
2. Author’s Warranties
The author warrants that the article is original, written by stated author(s), has not been published before, contains no unlawful statements, does not infringe the rights of others, is subject to copyright that is vested exclusively in the author and free of any third party rights, and that any necessary written permissions to quote from other sources have been obtained by the author(s).
3. User Rights
Journal of Governance Risk Management Compliance and Sustainability (JGRCS) objective is to disseminate articles published are as free as possible. Under the Creative Commons license, this journal permits users to copy, distribute, display, and perform the work for non-commercial purposes only. Users will also need to attribute authors and this journal on distributing works in the journal.
4. Rights of Authors
Authors retain the following rights:
Copyright, and proprietary rights relating to the article, such as patent rights,
The right to use the substance of the article in future own works, including lectures and books, The right to reproduce the article for own purposes, The right to self-archive the article, the right to enter into separate, additional contractual arrangements for the non-exclusive distribution of the article's published version (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal (Journal of Governance Risk Management Compliance and Sustainability).
The author has a non-exclusive publishing contract with a publisher and the work is published with a more restrictive license, the author retains all the rights to publish the work elsewhere, including commercially, because she/he is not subject to the conditions of her / his own license, regardless of the type of CC license chosen.
5. Co-Authorship
If the article was jointly prepared by other authors, the signatory of this form warrants that he/she has been authorized by all co-authors to sign this agreement on their behalf, and agrees to inform his/her co-authors of the terms of this agreement.
6. Termination
This agreement can be terminated by the author or Journal of Governance Risk Management Compliance and Sustainability (JGRCS) upon two months’ notice where the other party has materially breached this agreement and failed to remedy such breach within a month of being given the terminating party’s notice requesting such breach to be remedied. No breach or violation of this agreement will cause this agreement or any license granted in it to terminate automatically or affect the definition of Journal of Governance Risk Management Compliance and Sustainability (JGRCS).
7. Royalties
This agreement entitles the author to no royalties or other fees. To such extent as legally permissible, the author waives his or her right to collect royalties relative to the article in respect of any use of the article by This agreement can be terminated by the author or Journal of Governance Risk Management Compliance and Sustainability (JGRCS) upon two months’ notice where the other party has materially breached this agreement and failed to remedy such breach within a month of being given the terminating party’s notice requesting such breach to be remedied. No breach or violation of this agreement will cause this agreement or any license granted in it to terminate automatically or affect the definition of Journal of Governance Risk Management Compliance and Sustainability (JGRCS) or its sublicensee.
8. Miscellaneous
Journal of Governance Risk Management Compliance and Sustainability (JGRCS) will publish the article (or have it published) in the journal if the article’s editorial process is successfully completed and Journal of Governance Risk Management Compliance and Sustainability or its sublicensee has become obligated to have the article published. Journal of Governance Risk Management Compliance and Sustainability may conform the article to a style of punctuation, spelling, capitalization, referencing and usage that it deems appropriate. The author acknowledges that the article may be published so that it will be publicly accessible and such access will be free of charge for the readers
