Vat, Tariffs, and Withholding: Border Taxes and Informality in Developing Countries

This paper delves into the complexities of border taxes, particularly focusing on the value-added tax (VAT) as it pertains to developing countries. Keen examines how VAT captures informal economic activities that may otherwise go unrecorded, highlighting the challenges posed by tariffs and withholding taxes.

Through a nuanced analysis, the author addresses the potential benefits and drawbacks of implementing such fiscal policies. The implications of these taxes not only affect government revenue but also influence market dynamics and the overall economic landscape. Keen’s exploration offers valuable insights into how these mechanisms could be optimized to foster growth and reduce informality in emerging economies.