A proposal for Accrual-Based Accounting in the Tax Administration for the Value Added Tax
DOI:
https://doi.org/10.24215/26185474e034Keywords:
VAT, public accounting, accrual basis, tax administrationAbstract
The article presents a novel method for addressing the accounting registration of Value Added Tax (VAT) in the Public Sector. This proposal stands out for its focus on adopting an accrual basis, which allows for more effective control of the tax derived from the invoices issued by VAT payers. By recording the tax’s entire history from origin to application, detailed tracking and continuous verification are facilitated, thereby enhancing the transparency and efficiency of the process.
One of the main advantages of this proposal is its ability to distinguish between taxable events that generate accrued resources and those that simply involve non-revenue variations of public assets. This is crucial for controlling potential fraudulent practices by taxpayers and streamlining the pre-refund tax control process.
The study acknowledges the inherent challenges in the accounting treatment of taxes in the public sphere, especially regarding recording them in the period when the taxable event occurs, as opposed to using simplified recording systems. In this regard, it highlights the importance of disaggregating tax revenues to better understand the so-called "tax gap," which includes not only accrued taxes but also associated costs of evasion.
The article provides a review of relevant literature and regulations, emphasizing the use of the "design by analogy" method to formulate this registration proposal. A detailed design of the registrations to be carried out is presented in the main chapter, along with an appendix containing the manual of accounts to be used. Thus, the advantages of accounting registration of VAT under the full accrual system are emphasized, leveraging new technologies to improve information transmission between taxpayers and agencies. In the conclusions, the study's contributions are summarized, and significant areas for future research are proposed.
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