Proposed Reform to the Value Added Tax System in Venezuela

Abstract

This paper reviews a comprehensive reform to the Venezuelan VAT System, based on the decentralization of the Value Added Tax from the Federal Government to the States Government. Must developing countries face many political, administrative and other issues that hold resources from getting to the population through the established mechanisms. By this reform, the power to regulate, collect and administer the VAT would be transfered to the States Government to promote development throughout the regions. The reform could be on one hand, a risky proposal, but on the other hand a very powerful tool to provide better resources to the States and therefore better services to the population.

Keywords: Venezuela, Value Added Tax, Development, Reform

JEL Classification: E61, E62, F3, H2