International Journal of Nonlinear Analysis and Applications

Investigate the possible effects of the implementation of value-added tax on the amount of government budget deficit, cost of domestic products, demand pressure, inflationary expectations and inflation in Iran

Document Type : Research Paper

Authors

Department of Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran

Abstract

This paper investigates the possible effects of the implementation of value-added tax on Iran's inflation in companies listed on the Tehran Stock Exchange. The time domain of the collected data includes the financial statements of manufacturing companies accepted in the Tehran Stock Exchange in 6 years from the spring of 2014 to the spring of 2019. The obtained data includes manufacturing, service companies and institutions. Moreover, leasing companies, financial institutions, insurance and banks are not included with their data uploaded based on the Kodal site. The liquidity growth has been obtained from 2013 as the base year. This paper evaluates the collected data in two descriptive and inferential statistics sections. The descriptive analysis includes the indicators of descriptive statistics of frequency, percentage of relative frequency, mean, standard deviation, and inferential section art investigates research hypotheses using independent variables over dependent variables. In the following, efforts were made to investigate the direct and indirect effects of statistical equations and Eviews10, Excel software. the modified model results show the estimated coefficient of (β=368.1346). Also, the value (T=3.803553) of the critical point (2) and the probability level of Prob=0002, show that the estimated coefficient obtained is significant. The R2 value indicates that the variable of inflation, which is known as an independent variable, has been able to affect the dependent variable of value-added tax by 0.89\%. The value of AR(1) is the amount of residual or residual based on the time pattern. According to the correction of the model, Durbin-Watson's value ranges from 1.80 to 10.2 for the optimal fit model.

Keywords

[1] J. Aizenman and Y. Jinjarak, The collection efficiency of the value added tax: theory and international evidence, Santa Cruz Department of Economics, Working Paper Series, UC Santa Cruz, 2005. 
[2] K. Benkovskis and L. Fadejeva, The effect of VAT rate on inflation in Latvia: evidence from CPI microdata, Appl. Econ. 46 (2014), no. 21, 2520–2533.
[3] L. Ebrill, M. Keen, J.-P. Bodin, and V. Summers, The modern VAT, International Monetary Fund, 2001.
[4] A. Ershadi, S.A. Najafizadeh and M. Mahdavi, The effect of value added tax on prices in Iran, Econ. Res. Policy Quart. 19 (2014), no. 58.
[5] J.A. Giesecke and N.T. Hoang, Modeling value-added tax in the presence of multi-production and differentiated exemptions, J. Asian Econ. 21 (2010), no. 2, 156–173.
[6] S.S. Hosseini and M. Shokouhi, Examining the factors affecting inflation with emphasis on the role of retrospective and prospective expectations, Econ. Res. Quart. (Sustainable Growth and Development), 15 (2015), no. 1, 209–228.
[7] M. Keen and B. Lockwood, The value added tax: Its causes and consequences, J. Dev. Econ. 92 (2010), no. 2, 138–151.
[8] H. Nabizadeh, Investigating the mutual effect of inflation and value-added tax in Iran’s economy, Econ. J. 5-6 (2014), no. 55–116.
[9] E. Naderian and A. Ranjbaraki, Consequences of implementation of value added tax and laying the groundwork for its successful implementation in Iran, Majlis Strategy 2007 (2007), no. 56.
[10] S. Naghavi and N. Shahnooshi, Using Bayesian causal maps to investigate factors affecting inflation in Iran’s economy, Econ. Res. 110 (2015), 217–252.
[11] O.C. Olatunji, Value added tax (VAT) and inflation in Nigeria (1990 to 2003), Asian J. Humanities Soc. Sci. (AJHSS) 1 (2013), no. 1.
[12] F. Rozbeh, B. Khazdozi, H. Sultanpanah, H. Kaveh, and K. Taherkhuiani, Investigating the effects of value added tax implementation on inflation in Iran’s economy in 2010, Growth Sustain. Dev. Res. 14 (2014), no. 3.
International Journal of Nonlinear Analysis and Applications
Volume 16, Issue 4
April 2025
Pages 311-324
  • Receive Date: 07 September 2022
  • Accept Date: 11 December 2022